UC-NRLF 
 
LIBRARY 
 
 OF THE 
 
 UNIVERSITY OF CALIFORNIA. 
 
 GIFT OF 
 
 Class 
 
Circuit Court of the United States 
 
 For the Eastern Division of the Eastern 
 District of Missouri. 
 
 UNITED STATES OF AMERICA 
 
 vs. 
 
 STANDARD OIL COMPANY AND OTHERS. 
 
 Brief of the I/aw on Behalf of Defendants 
 Standard Oil Company and others. 
 
 JOHN G. JOHNSON, 
 JOHN G. MILBURN, 
 
 Of Counsel. 
 
 C. G. BURGOYNB, 72 to 78 Spring Street, New York. 
 
Circuit Court of the United States 
 
 For the Bastern Division of the Eastern 
 District of Missouri. 
 
 UNITED STATES OF AMERICA 
 
 vs. 
 
 STANDARD OIL COMPANY AND OTHERS. 
 
 Brief on Behalf of Defendants Standard Oil 
 Company and others. 
 
 JOHN G. JOHNSON, 
 JOHN G. MILBURN, 
 
 Of Counsel. 
 
Circuit Court of the United States 
 
 FOR THE EASTERN DIVISION OF THE 
 EASTERN DISTRICT OF MISSOURI. 
 
 UNITED STATES OF AMERICA 
 vs. 
 
 STANDARD OIL COMPANY and 
 others. 
 
 BRIEF FOR STANDARD OIL COM- 
 PANY AND OTHERS. 
 
 The Theory of the Bill. 
 
 The gravamen of the bill is an alleged con- 
 spiracy to restrain and monopolize the trade and 
 commerce in petroleum and its products among 
 the States and Territories of the United States, 
 the District of Columbia, and foreign nations, in 
 which Mr. John D. Rockefeller, Mr. William 
 Rockefeller, Mr. Henry M. Flagler and others 
 
 230521 
 
have been engaged since the year 1870. The 
 operations of the conspiracy are divided into 
 three periods : one extending from 1870 to 
 1882 ; another from 1882 to 1899 ; and the last 
 from 1899 to the present time. The character- 
 istic ascribed to the first period is the purchase 
 and acquisition of interests in concerns engaged 
 in different branches of the oil business for the 
 purpose of fixing the price of crude and refined 
 oil, limiting their production, and controlling 
 their transportation. The characteristic ascribed 
 to the second period is the formation of what is 
 known as " The Standard Oil Trust ", by which 
 various independent firms, corporations, limited 
 partnerships and individuals engaged in the oil 
 business turned over the management of their 
 businesses to nine trustees. The characteristic 
 ascribed to the third period is the vesting of this 
 control and management in the Standard Oil 
 Company (of New Jersey) as a holding company. 
 The bill then proceeds to treat each of these 
 periods in detail. 
 
 First Period, 1870 to 1882. 
 
 This period begins with the organization of 
 the Standard Oil Company of Ohio in the year 
 
3 
 
 1870 with a capital stock of $1,000,000, to take 
 over the businesses of Rockefeller & Andrews, 
 William Rockefeller & Company and Rocke- 
 feller & Company, located at Cleveland, Ohio, 
 and New York City. This company, so it is 
 alleged, acquired during the years 1871, 1872 
 and 1873 all the competing refineries in Cleve- 
 land, Ohio, excepting three or four, the owners 
 of which were forced to sell by their inability to 
 compete with it owing to the rebates and prefer- 
 ential rates which it obtained from the railroad 
 companies, (p. 13). 
 
 The names of a large number of companies, 
 partnerships and individuals engaged in the oil 
 business at various times during this period are 
 given, and it is alleged that they and others 
 formed associations and entered into agree- 
 ments, combinations and conspiracies between 
 themselves, to fix the price of crude oil, 
 and limit its production, to fix the price 
 of the products of crude oil and limit their 
 production, and to suppress competition 
 and monopolize the trade. The only specific 
 instance mentioned is an agreement of Decem- 
 ber 1 9th, 1872, between two associations, one 
 known as the Petroleum Producers Association 
 
4 
 
 and the other the Petroleum Refiners Associa- 
 tion (p. 1 8). This agreement is Exhibit i. (pp. 
 
 It is alleged that the individuals engaged in 
 the conspiracy acquired during this period by 
 the sale of stock interests in the Standard Oil 
 Company of Ohio interests in the stocks and 
 businesses of many of the concerns previously 
 mentioned, and through these interests and 
 agreements with other refiners controlled in the 
 latter part of the period more than 90 per cent, 
 of the oil business, and were enabled to do so 
 and crush and limit competition by means of re- 
 bates and preferential rates obtained from rail- 
 roads, particularly the Pennsylvania Railroad, 
 the New York Central and Hudson River Rail- 
 road, with its connection the Lake Shore and 
 Michigan Southern Railroad, the Erie Railway, 
 with its connection the Atlantic and Great 
 Western Railway, the Jersey Central Railroad, 
 the Reading, and the Baltimore and Ohio. (pp. 19, 
 20, 21). 
 
 Then follows a specification of various con- 
 tracts with railroad companies which are alleged 
 to have had this effect, as follows : 
 
 (a) The organization of the South Improve- 
 
ment Company in January, 1872, and the con- 
 tract between it and various railroad companies, 
 (pp. 21-25. Contract Exhibit 2, pp. 198-207). 
 
 (b] Leases or agreements between 1874 and 
 1877 for the control of the terminal facilities of 
 the various railroad companies for unloading, 
 storing and handling oil at Jersey City, New 
 York, Baltimore and Philadelphia, (pp. 25-28 ; 
 contracts with the Erie Railway, Exhibits 3 and 
 4, pp. 208-216 ; contract with the N. Y. C. & H. 
 R. R. Co. and the Lake Shore Company, pp. 
 217-219). 
 
 (c) A pooling contract between the railway 
 companies of October i, 1874, with its provision 
 for drawbacks to refiners of crude oil and ship- 
 pers of crude oil to the seaboard, (pp. 28-30 ; 
 agreement Exhibit 6, pp. 220-226). 
 
 (cf) A contract of October 17, 1877, between the 
 Pennsylvania Companies and the Standard Oil 
 Company whereby the Standard Oil Company 
 agreed to arrange its shipments by the various 
 railroads to maintain their proportions of the 
 traffic as fixed by an agreement between the 
 railroad companies, and to guarantee a mini- 
 mum of oil traffic, for which it was to receive a 
 commission of ten per cent, of the rates on its 
 
own shipments. It is alleged that there was a 
 similar contract with the New York Central and 
 Erie Companies, (pp. 31, 32 ; Exhibit 7, pp. 
 227-229). 
 
 (e) Contracts between the American Transfer 
 Company, a pipe line company, and the New 
 York Central, Erie and Pennsylvania Companies, 
 whereby the railroad companies agreed to pay 
 to the Transfer Company twenty cents a barrel 
 on all crude oil carried by the railroads, (pp. 33, 
 34 ; contract with Pennsylvania Company, Ex- 
 hibit 8, pp. 231-233 ; contract with the Erie 
 Railway Company, Exhibit 9, pp. 234, 235). 
 
 (f) An allowance by the railroad companies 
 during the years 1877 and 1878 of an additional 
 fifteen cents per barrel on shipments of crude oil 
 by the Standard Oil Company and its allied 
 interests, (p. 35). 
 
 It is further alleged that in 1879 separate suits 
 were brought by the State of Pennsylvania 
 against the Pennsylvania Railroad Company 
 and other railroad companies, and against the 
 United Pipe Lines Company, to oust them from 
 their franchises in Pennsylvania because of 
 these contracts or some of them; which suits 
 were adjusted by a contract between the Standard 
 
Oil Companies and the Independent Petroleum 
 Producers' Union, and a contract between the 
 Union and the Pennsylvania Railroad Com- 
 pany, (pp. 36-38 ; Exhibit 10, pp. 236-241). 
 
 It is further alleged that the parties to the 
 conspiracy acquired during this period in the 
 name of the Standard Oil Company the owner- 
 ship and control of the principal pipe lines ex- 
 tending from the oil regions of Pennsylvania 
 to the various railroads over which oil was 
 transported to the refineries at Philadelphia, 
 New York, Cleveland and other points, and con- 
 solidated them first into the American Transfer 
 Company and the United Pipe Lines, and later, 
 in the year 1881, into the National Transit Com- 
 pany ; and that they were thereby enabled to fix 
 the price of crude oil and the price for its trans- 
 portation by pipe lines and railways, resulting 
 in rate discriminations against their competitors. 
 (PP- 38, 39)- 
 
 Period, 1882 to 1899. 
 
 The formation of the so-called Standard Oil 
 trust is alleged, including the trust agreement 
 of January 2d, 1882, and the supplemental 
 agreement of January 4th, 1882. (p. 39). 
 
Referring to the corporations and limited part- 
 nerships named in the trust agreement it is 
 charged as follows (pp. 54, 55) : 
 
 " And that each and all of said corpora- 
 tions and limited partnerships were at the 
 time of the signing of said agreement, and 
 for a long time prior thereto, so engaged 
 separately in said business as such corpora- 
 tions and limited partnerships ; and that by 
 the said trust agreement and the placing of 
 said stock interests in the hands of said trus- 
 tees, as by the said agreement provided, all 
 competition among the said corporations, 
 limited partnerships and individuals was 
 suppressed and destroyed, and the aforesaid 
 trade and commerce among the several 
 states and territories of the United States, 
 the District of Columbia, and both foreign 
 nations, as above described, was restrained 
 and monopolized." 
 
 The trustees organized as a body ; adopted 
 by-laws ; and proceeded pursuant to the trust 
 agreement to organize the Standard Oil Com- 
 pany of New Jersey and the Standard Oil Com- 
 pany of New York. (pp. 55, 56). 
 
 It is further alleged as follows (pp. 56, 57) : 
 
 " Your petitioner further alleges that pur- 
 suant to said trust agreement the said trus- 
 tees caused to be transferred to themselves 
 
the stocks of all corporations and limited 
 partnerships named in said trust agreement, 
 and caused various of the individuals and 
 co-partnerships who owned independent re- 
 fineries and other properties employed in the 
 business of refining and transporting and 
 selling oil in and among the said various 
 states and territories of the United States as 
 aforesaid, to transfer their property situated 
 in said several states to the respective 
 Standard Oil Companies of said States of 
 New York, New Jersey, Pennsylvania and 
 Ohio, and other corporations organized or 
 acquired by said trustees from time to time." 
 
 The trust certificates were in the following 
 form (p. 57) : 
 
 " No. Shares $100 each. Shares 
 STANDARD OIL TRUST. 
 
 " This is to certify that 
 
 is entitled to shares in the equity to 
 
 the property held by the trustees of the 
 Standard Oil trust, transferable only on the 
 books of said trustees on surrender of this 
 certificate. This certificate is issued upon 
 condition that the holder or any transferee 
 thereof shall be subject to all the provisions of 
 the agreement creating said trust and of the 
 by-laws adopted in pursuance of said trust 
 agreement as fully as if he had signed the 
 said trust agreement." 
 
10 
 
 The individuals to whom these certificates 
 were issued at the time of the formation of the 
 trust are given on pages 58 and 59. 
 
 It is alleged that from time to time during 
 this period other properties belonging to concerns 
 engaged in various branches of the oil business 
 in competition with the trust were acquired, and 
 their property or stocks transferred to corpora- 
 tions owned or controlled by the trustees or to 
 the trustees, (p. 59). 
 
 A list of the corporations whose stocks were 
 in whole or in part held by the trustees in the 
 year 1888 is given (pp. 60, 61). Between that 
 time and 1892 these various interests by trans- 
 fers of properties and stocks were vested in 
 twenty companies, which are named on page 62. 
 
 It is alleged that (p. 63) : 
 
 " the individual defendants herein, being at 
 all times a majority of and in control of 
 said board of trustees, . . . controlled 
 all of said separate corporations through 
 said stock ownership, and elected boards of 
 directors and officers in the said various 
 corporations from time to time, and man- 
 aged them all in harmony." 
 
 As a result of the judgment in a suit in the 
 Supreme Court of the State of Ohio, entitled 
 
11 
 
 State of Ohio, ex rel. Attorney General vs. 
 Standard Oil Company (of Ohio) (49 Ohio St., 
 137), a meeting of the trust certificate holders 
 was held on March 21, 1892, and a resolution 
 adopted terminating the trust agreement of Janu- 
 ary 2d, 1882, and providing for the winding up 
 of the trust, (pp. 63, 64 ; resolution, pp. 64, 65). 
 
 The trust certificates issued at the time of the 
 formation of the trust amounted to $70,000,000. 
 At the time of the dissolution they amounted to 
 $97,250,000 ; the additional certificates having 
 been issued for stock dividends and in payment 
 of properties acquired. The plan of dissolution 
 provided for issuing to each certificate holder on 
 the surrender of his certificates an assignment of 
 an interest in the stocks held by the trustees in 
 the proportion of the number of his certificates 
 to the total outstanding certificates, (p. 66 ; 
 Assignment, p. 67). 
 
 Holders of more than a majority of the out- 
 standing certificates surrendered their certifi- 
 cates, obtained their assignments of legal interest, 
 and converted them into shares of the twenty 
 companies. It is alleged that the individual de- 
 fendants so surrendered their certificates ; that 
 the mass of certificate holders retained their 
 
12 
 
 certificates down to the acquisition of the shares 
 of the twenty companies by the Standard Oil 
 Company (of New Jersey) in 1899 > an( ^ that 
 thereby the " individual defendants in this action, 
 who were the liquidating trustees, did continue to 
 manage the affairs of all said separate corpora- 
 tions so engaged in said business in the same 
 manner as they had theretofore under and by 
 virtue of the terms of said trust agreement ". 
 
 ( P . 6 9 ). 
 
 Period, 1899 to the present time. 
 
 In January, 1899, the charter of the Standard 
 Oil Company (of New Jersey) was amended, and 
 its capital stock increased from ten million dol- 
 lars to one hundred and ten millions, of which 
 the outstanding ten millions were declared to be 
 preferred stock and the remaining one hundred 
 millions common stock. Of the shares of com- 
 mon stock $97,250,000 were then issued in ex- 
 change for the shares of the companies and lim- 
 ited partnerships which had been held by the 
 trustees of the trust (including the preferred 
 stock of the Standard Oil Company of New 
 Jersey), and represented by the $97,250,000 of 
 trust certificates outstanding at the time 
 of the dissolution in 1892. This, it is 
 
13 
 
 charged, was done by the individual defendants 
 for the purpose of further carrying out the con- 
 spiracy and effecting a monopoly of the oil busi- 
 ness, (pp. 70-74). 
 
 The names of sixty-nine companies are given 
 as the companies now controlled by the de- 
 fendants (pp. 75, 76). Some of these com- 
 panies are described as engaged in refining ; 
 others in transporting crude oil through pipe 
 lines ; others as owners of tank cars and steam- 
 ships for the transportation of oil ; and others as 
 engaged in the marketing of oil throughout the 
 United States, (pp. 79-84). Then follows a gen- 
 eral allegation that from 1882 to 1899 the Stand- 
 ard Oil Trust, and since 1899, tne Standard 
 Oil Company and its subsidiary corpora- 
 tions, have refined and sold more than 
 ninety per cent, of the petroleum products 
 manufactured and consumed in the United States 
 and shipped to foreign countries, and have 
 monopolized the commerce, traffic, transporta- 
 tion, refining and sale of oil, in the United States 
 and foreign countries, thereby restraining such 
 commerce, regulating the production and supply 
 of the products, and fixing the price thereof, (pp. 
 84-86). 
 
14 
 
 The remainder of the bill is devoted to a 
 statement of the various means by which this 
 monopolization has been effected. The head- 
 ings of the various subdivisions sufficiently in- 
 dicate for our present purpose what those means 
 as so set forth are, and we give them in their 
 order as follows : (i) agreements with Tidewater 
 Companies (pp. 86-89 ; Exhibit 13, pp. 251- 
 260) ; (2) contract with Pennsylvania Railroad 
 Company of August 22, 1884 (pp. 89-92 ; Ex- 
 hibit 14, pp. 262-268) ; (3) restraint and 
 monopolization by control of pipe lines (pp. 
 92-95; Exhibit 15, pp. 269-271); (4) unfair 
 practices against competing pipe lines (pp. 97- 
 101) ; (5) certain contracts in restraint of trade 
 (pp. 101-108 ; Exhibit 16, pp. 272, 273 ; Ex- 
 hibit 17, pp. 274-276) ; (6) railroad discrimina- 
 tions, instances of which are given as fol- 
 lows : (a) in southern states (pp. 110-124) ; (b) 
 in southwestern territory (pp. 124-129) ; 
 (c) rates from Kansas points (pp. 130-133); (d) 
 failure to pro-rate on shipments to Pacific Coast 
 (pp. 133-134) ; (*0 failure to pro-rate on ship- 
 ments to North-West (pp. 125-137); (/) dis- 
 criminations in New York and New England 
 (pp. 134-147); (g) discriminations between 
 
15 
 
 Parkersburg and Marietta (pp. 147-149) ; (h) dis- 
 criminations in California (pp. 149-153) ; and (z) 
 discriminations in Central States (pp. 153-161) ; 
 (7) general system of discrimination ; control of 
 railroads (pp. 162-167) ; (8) monopoly of sale of 
 lubricating oil to railroads (pp. 167-172); (9) 
 unfair methods of competition consisting of (a) 
 local price cutting (pp. 173-176); (b) reports 
 of competitor shipments (pp. 176-178) ; (c) 
 operation of bogus independent companies (pp. 
 178-181), and (d) payment of rebates on oil 
 prices (pp. 181-182) ; and (10) division of terri- 
 tory (p. 185). 
 
 The bill closes with the allegation that by 
 reason of the control of the oil business by the 
 Standard Oil Trust and the Standard Oil Com- 
 pany (of New Jersey) the profits since January 
 ist, 1882, have been exorbitant (pp. 182-184). 
 
 This is the case made by the bill. Its essen- 
 tial features are : 
 
 (1) A conspiracy entered into by certain 
 individuals to restrain and monopolize the 
 oil business, dating back to 1870 ; 
 
 (2) A combination of competitive plants 
 and properties in execution of the con- 
 spiracy ; 
 
16 
 
 (3) The employment of certain means and 
 agencies after the acquisition of the 
 properties to effect the monopoly ; and 
 
 (4) The actual present monopolization of 
 the business by those means and agencies. 
 
 Summary of facts bearing on the alleged 
 combination or conspiracy in restraint of 
 trade. 
 
 (i) In 1865 Mr. John D. Rockefeller became 
 the owner of a refinery in Cleveland, with which 
 he had been connected for three or four years, 
 and organized the firm of Rockefeller & Andrews 
 to continue its business. Rockefeller & Andrews 
 in 1866 associated themselves with Mr. William 
 Rockefeller in the formation of the firm of Will- 
 iam Rockefeller & Company, which built another 
 refinery on property adjacent to the refinery of 
 Rockefeller & Andrews. In the same year Mr. 
 John D. Rockefeller, Mr. Andrews and Mr. Will- 
 iam Rockefeller organized the firm of Rockefeller 
 & Company, with headquarters at New York 
 City, " to develop the sale of oil from that point 
 and to save for our business the expenses of com- 
 mission men ; and by doing our own warehouse 
 business to reduce, if possible, to the minimum 
 
17 
 
 of cost the handling of the oil which we ex- 
 ported " (Vol. 1 6, p. 3054). The properties of 
 these firms were in 1867 taken over by the new 
 firm of Rockefeller, Andrews & Flagler. Addi- 
 tional capital was brought in by Mr. Flagler 
 who at that time became a member of the firm. 
 This firm had two refineries at Cleveland where 
 the mannfacturing was done; a domestic trade 
 from Cleveland ; and an export trade from New 
 York. 
 
 The Standard Oil Company of Ohio was or- 
 ganized in 1870 by the members of this firm to 
 take over its property and business. Its capital 
 was $1,000,000, represented mainly by the prop- 
 erty and business thus acquired. The balance 
 was new capital contributed by capitalists in 
 Cleveland and New York City. 
 
 Mr. John D. Rockefeller, Mr. Andrews, Mr. Wil- 
 liam Rockefeller and Mr. Flagler were young, 
 vigorous and able men. Mr. Andrews was a prac- 
 tical refiner and devoted himself particularly to 
 the manufacturing branch of the business. The 
 Messrs. Rockefeller and Mr. Flagler devoted them- 
 selves particularly to its commercial and financial 
 interests. The firm of Rockefeller, Andrews & 
 Flagler had by its enterprise, methods, zeal 
 
18 
 
 and business capacity won for itself position, 
 standing and credit. The organization of the 
 Standard Oil Company of Ohio, with its in those 
 days large capital of one million dollars, enabled 
 it with the credit and confidence it commanded 
 to provide itself with the means of conducting its 
 business on the most advanced, effective and 
 economical lines. It was no doubt at that time 
 one of the concerns in the business best equipped 
 to cope with the widespread demoralization which 
 prevailed. 
 
 (2) The result of the discovery of petroleum 
 in the northwestern part of Pennsylvania, of a suc- 
 cessful method of mining it, of the application of 
 methods of refining it into kerosene, and of the 
 usefulness of the product for illuminating, heat- 
 ing and lubricating purposes was, during the 
 '60's, the multiplication of refineries of all sorts 
 and kinds, and a vast excess of refining capacity 
 both with respect to the production of the crude 
 oil and the demand for its products. Chaotic 
 conditions prevailed in every branch of the in- 
 dustry; production, manufacturing and trans- 
 portation. There was a continual war of con- 
 flicting interests and a maximum of instability. 
 
19 
 
 (a) The period of substantial production be- 
 gan in 1860 with a volume of 500,000 barrels, 
 which had increased in 1865 to 2,500,000, and in 
 1870 to over 5,000,000 barrels. A vast number 
 of people were drawn to the oil fields, the 
 earliest of which were in Venango County, 
 Pa., extending from the south-east corner of 
 Warren County to Franklin. Wells were sunk 
 in great numbers and a wild spirit of adventure 
 prevailed. At the close of the war there was a 
 rush from the disbanding armies to the oil 
 fields. Many of the wells that were sunk turned 
 out dry, others would produce large quantities 
 for a short time, and others had a longer life. 
 Many who sank wells had but little capital and 
 were compelled by their necessities to sell their 
 production at whatever they could get for it. 
 The facilities for storage and transportation 
 were to the last degree meagre. These condi- 
 tions, intensified by the spirit of speculation 
 which they inevitably engendered, produced 
 during those years wild fluctuations in the prices 
 of crude oil, prices which ranged from $20 to 
 10 cents a barrel. The following table shows 
 the average price of crude oil during the years 
 
20 
 
 from 1860 to 1869 compiled from Government 
 documents : 
 
 per barrel 
 
 1861 
 
 .40 
 
 1862 
 
 
 1861... 
 
 7. it: 
 
 1864 . 
 
 8.06 
 
 1865. 
 
 6.^0 
 
 1866 
 
 7.74 
 
 1867.. 
 
 2.41 
 
 1868 
 
 1.62^ 
 
 1860.. 
 
 
 These are yearly averages showing only the 
 differences year by year, and not the much 
 wider fluctuations from month to month, and 
 even from day to day. In 1860, for example, 
 the range was from $20.00 to $2.00 ; in 1862 
 from $2.50 to IQC; and in 1864 from $14.00 to 
 
 $3-75- 
 
 A manufacturing business cannot be estab- 
 lished on a sound basis when its raw material is 
 subject to such abnormal fluctuations. 
 
 () The crude oil had at first to be trans- 
 ported to the railroads by wagon. Later short 
 pipe lines were laid to gather the oil at the wells, 
 
21 
 
 which were connected by other lines with the 
 branch extensions of the various railroads as 
 they were built. There was the same disregard 
 of practical conditions in laying these pipe lines 
 that characterized the sinking of wells. There 
 was an unnecessary multiplication of lines to 
 every locality where oil was being found, and a 
 struggle to get the business at any price. Lines 
 were laid with insufficient capital behind them ; 
 many of them became useless soon after they 
 were built through the exhaustion of the wells ; 
 and under such conditions there could be neither 
 remunerative nor uniform rates. 
 
 (c) The same conditions prevailed in the re- 
 fining branch of the industry. At first there 
 was a mushroom development of insignificant 
 refineries at Oil City, Titusville, other points 
 along the Allegheny River, Erie, Pittsburgh, 
 Cleveland, and the Atlantic seaboard. War 
 taxation crushed out many of these. The con- 
 ditions in other branches of the industry which 
 have been described were fatal to others. Im- 
 provements in methods were beyond the means 
 of those who had little or no capital. Those 
 who could find capital enlarged and improved 
 their refineries and established themselves on a 
 
22 
 
 firmer basis. The removal of war taxation in 
 1868 again stimulated construction, as did the 
 continually increasing volume of the crude pro- 
 duction. The result was a great excess of refining 
 capacity. In " Derricks Hand-Book of Petro- 
 leum," Vol. i, page 780, the daily refining ca- 
 pacity in 1873 of all the refineries is stated to be 
 47,000 barrels, which was more than twice the 
 amount of crude produced. The testimony shows 
 that the excess of refining capacity was much 
 greater before that time. Moreover the crude 
 production was greater than the demand for the 
 manufactured products. This is shown by the 
 fact that the stocks of crude oil increased be- 
 tween 1871 and 1873 at the rate of 500,000 bar- 
 rels a year, and in 1874 the increase was two 
 millions of barrels. Obviously, as the same 
 authority observes, " Many of the refineries had 
 to shut down part of the time, or else not oper- 
 ated to their full capacity." 
 
 (d] The railway situation was equally compli- 
 cated. The three trunk lines which competed 
 for oil traffic were the Pennsylvania to the south 
 of the oil fields ; the Erie, with its connection 
 the Atlantic and Great Western, and the New 
 York Central with its connection the Lake 
 
23 
 
 Shore and Michigan Southern Railroad, to the 
 north. The Pennsylvania Railroad had the most 
 advantageous position. Its haul to the seaboard 
 from the points where it received the crude and 
 refined oil was shorter than that of the other 
 lines, and as the oil fields extended southerly 
 into Clarion and Butler Counties from 1869 on it 
 became shorter and shorter. This is apparent 
 from the fact that the distance from Pittsburgh 
 to Philadelphia is about 400 miles, whilst the 
 haul on the Erie and its connection from Oil 
 City to New York was 550 miles, and the haul 
 on the Lake Shore and New York Central Rail- 
 roads from Cleveland to New York was 740 
 miles. In the later 6o's and the early yo's the 
 struggle of these railway systems for traffic as 
 they were extended westward is a matter of 
 history. It affected every kind of traffic. 
 Agreements were made from time to time 
 to maintain rates, but were short-lived. 
 Every railroad company protected the 
 industries on its own line with special rates, and 
 special efforts were made for particular kinds of 
 traffic of growing importance. It was an era of 
 each road getting all the business it could by 
 offering the rates that would get it. The oil 
 
24 
 
 traffic was no exception. The Pennsylvania 
 Railroad naturally felt itself entitled to the 
 major part of the traffic because of its proximity 
 to most of the refining points and its shorter 
 line to the seaboard. The New York Central 
 and Erie were bound to get all they could 
 and took whatever measures were necessary 
 to that end. The effort of the Pennsylvania 
 was to control the transportation of crude oil 
 from the oil regions, and the refined oil from the 
 refineries in that locality and Pittsburg. In the 
 language of the day, " Cleveland was to be wiped 
 out as a refining centre." The effort of the 
 New York Central was to protect and develop 
 Cleveland as a refining center. The effort of the 
 Erie was to get a fair share of the business from 
 the oil fields and the refineries in the oil regions. 
 The situation was further complicated by the 
 fact of water transportation to New York via 
 Lake Erie and the Erie Canal. 
 
 (e) These were the conditions which existed 
 during the period mentioned. There was demor- 
 alization in every branch of the business ; in 
 production, in refining, in local pipe line trans- 
 portation, and in railroad transportation. Every 
 branch of the business was in an abnormal state. 
 
25 
 
 There was no certainty or stability in any part 
 of it. There was a deadly struggle at every 
 point, and the oil business was threatened with 
 ruin. 
 
 (3) Farseeing and conservative men sought for 
 a cure for this disastrous condition of affairs. 
 Those who would naturally lead the way were 
 the railroad companies and the larger refiners. 
 The plan of the South Improvement Company 
 was evolved for this purpose late in 1871 and the 
 beginning of 1872. Its object was to co-ordinate 
 the various branches of the industry ; to bring 
 together the producer, the refiner and the rail- 
 road ; to adjust their relations so as to secure for 
 the producer a fair and adequate remuneration 
 for his product, to assure the refiner his sup- 
 ply at a reasonable and normal price and equal 
 railroad rates, and to secure for the railroads 
 fair and remunerative rates for the trans- 
 portation of the oil. It originated with the 
 railroads and some of the leading refiners in 
 Pittsburgh and Philadelphia. The Standard 
 Oil Company had no faith in its practicability, 
 but gave its passive support that it might not 
 be charged with blocking an effort to ameliorate 
 
26 
 
 the conditions of the business. The plan failed 
 and never went into operation. It is not neces- 
 sary here to discuss it more in detail. Its his- 
 tory has been written from different points of 
 view, as will be seen by a reference to Miss 
 TarbelPs book and " The History of the 
 South Improvement Company," by Dr. Leonard 
 Woolsey Bacon. The version of the parties 
 who promoted it is found in the circular 
 which was issued at the time (Vol. 6, p. 2619). 
 Mr. John D. Rockefeller's version of it and of the 
 relations to it of the Standard Oil Company is 
 found in Vol. 16, pp. 3068-3071. That the rela- 
 tion of the Standard Oil Company to it was a 
 passive one is also shown by the testimony of 
 Mr. Flagler before a Committee of the House of 
 Representatives in the year 1888. (Report of 
 Committee on Manufactures of the House of Rep- 
 resentatives, 1888, p. 289). 
 
 (4) It is apparent that in the early seventies 
 the position of the Standard Oil Company of 
 Ohio and the other refiners at Cleveland was a 
 serious one. There was not only the general 
 demoralization of the business and the excess of 
 refining capacity at that and every other refining 
 
27 
 
 point, but the adverse attitude of the Penn- 
 sylvania Railroad to Cleveland as a refining 
 centre and its relative disadvantage with ref- 
 erence to the crude oil production as the 
 oil fields extended south into Marion and 
 Butler counties, and to the export business 
 because of its distance from the Atlantic sea- 
 board. Moreover in the excitement aroused 
 by the South Improvement Company a boycott 
 was maintained against the Standard Oil Com- 
 pany to deprive it of its supply of crude oil. 
 The facts in its favor were that it was then a 
 large and important concern of the most modern 
 type, equipped with the best appliances, and 
 owned and managed by able men in good credit, 
 who had faith in the business and the courage of 
 their faith. They felt that to maintain their 
 ground it was necessary to increase and ex- 
 pand their business, as their strength and 
 power of self preservation would grow with its 
 volume. Therefore in the latter part of 1871 
 negotiations took place between them and va_ 
 rious refiners in Cleveland, which were then 
 and during the year 1872 consummated by the 
 purchase of their refineries. The capital 
 stock of the Standard Oil Company of Ohio 
 
was increased from one to two millions and 
 a half of dollars. The purchases were made 
 for cash or with the stock of the Company as 
 the vendors might elect. The transactions were 
 entirely voluntary, and the charge that the sale 
 of these refineries was coerced in any way, or 
 that their owners were driven out of the busi- 
 ness, is unsupported by any evidence. On the 
 contrary many of them were glad to convert their 
 investments into cash because of the prevailing 
 conditions. Others who took stock in pay- 
 ment lost their confidence and sold it. On the 
 other hand so far from being a conspiracy to 
 monopolize the oil trade it was actually and ob- 
 viously a measure of self-preservation. The ob- 
 ject of the Standard Oil Company was to fortify 
 itself by an increase of its business. Had it not 
 done so it is very questionable whether Cleve- 
 land could have continued a refining centre, as 
 it was generally recognized that the entire in- 
 vestment in the oil business there was at stake. 
 
 Having by these acquisitions increased its re- 
 fining capacity the next step was to increase its 
 markets and marketing facilities. This it did 
 with respect to the export business by the pur- 
 chase in 1873 of the plant of the Long Island 
 
29 
 
 Refining Company in New York harbor, which 
 furnished it with extensive dock and warehouse- 
 ing facilities, and the purchase of the business 
 of the DeVoe Manufacturing Company, which 
 had a large trade in Europe and the Orient 
 in the sale of refined oils in cans, besides 
 being a manufacturer of the cans. To extend 
 its domestic trade it purchased at the same time 
 an interest in the firm of Chess, Carley & Co. 
 of Louisville, Kentucky, which had a large 
 marketing business in the south and southwest. 
 
 (5) Even at this distance of time it is not diffi- 
 cult to reconstruct what was bound to be the 
 normal development of the oil business in view 
 of the existing conditions. First and foremost 
 the development of the use of petroleum products 
 in this and foreign countries was necessary. That 
 involved a continuous extension and multiplica- 
 tion of marketing facilities. Refining was a pro- 
 gressive art, having as its end and aim the perfec- 
 tion of the products, economy in methods and 
 processes, and the utilization of the waste material 
 in by-products. The multiplication of refining 
 points was necessary to reach the different parts 
 of the country with a minimum of unnecessary 
 
30 
 
 transportation. The seaboard was the natural 
 locality to refine for export purposes, and differ- 
 ent regions of the country could be supplied from 
 particular interior refining points with the mini- 
 mum of transportation. It was necessary for a 
 regular and adequate supply of crude oil at nor- 
 mal prices that there should be adequate systems 
 of pipe lines to gather it at the wells and carry 
 it to the various railroad points, and tankage 
 systems for the storage of the oil whenever the 
 production exceeded the demands of the trade. 
 And it was only a matter of time when the rail- 
 road and ocean transportation of oil in barrels 
 would be superseded by a special kind of car and 
 a special kind of vessel, such as the tank car and 
 tank steamer of later times. 
 
 The development of the industry along these 
 lines would inevitably substitute organization for 
 chaos in each of its branches, and favor the sur- 
 vival of the fittest. The tendency would be from 
 instability to stability. That was the natural 
 order of things and there was no escape from it. 
 Without concentration there was only the 
 promise of destruction. The progressive refiner 
 must enlarge his sphere of operations ; reduce 
 the costs of his business to the lowest point ; 
 
31 
 
 extend his markets in every direction ; and co- 
 operate with other interests to establish normal 
 conditions. This would require intelligence, 
 enterprise, courage and capital. It meant, too, 
 that the man or men incapable of such an effort 
 for whatever reason must fall behind, or out of 
 the race altogether. Organization is the basis of 
 all success in the struggle for existence in the 
 industrial world, and particularly when there are 
 inter-dependent branches of an industry which 
 are only fruitful in co-operation. If to 
 organize, extend and develop an industry 
 is a criminal conspiracy then all great 
 enterprises are conspiracies in their conception 
 and origin. Such a view of the matter is 
 purely artificial, and unworthy of serious con- 
 sideration. We may therefore assume that the 
 men who constituted the Standard Oil Co. of 
 Ohio early saw that organization, expansion and 
 development were essential to the existence and 
 progress of the Company and its business ; that 
 they moved in that direction as their means 
 permitted and the opportunity offered ; and that 
 to do so was a natural course and not a con- 
 spiracy. 
 
32 
 
 (6) In 1872, as we have seen, the Company 
 was established on a large scale as a refiner in 
 Cleveland and had extended its marketing fa- 
 cilities in various directions. The next step for 
 its owners was to establish themselves as refiners 
 in the oil regions for the obvious advantages of 
 that situation. It was the vicinity of the crude 
 oil production, and if, in the turn of events, it 
 excelled as a refining locality to the point of 
 supremacy they would be there for the protection 
 of their interests and business. Early in 1874 
 they acquired the Imperial Oil Refinery, at Oil 
 City, a large modern refinery situated on the 
 Allegheny River. In the latter part of 1874 
 or the beginning of 1875, to establish them- 
 selves at other points which had special advant- 
 ages, they acquired refineries at Philadelphia, 
 including the refinery of the Atlantic Refining 
 Company, and refineries at Pittsburgh, includ- 
 ing the refinery of the Standard Oil Company 
 of Pittsburgh, a separate and distinct concern. 
 About the same time they purchased the re- 
 finery and business of Charles Pratt & Company 
 on the Brooklyn side of the East River, and 
 thereby acquired additional refining facilities at 
 the seaboard, increased dock properties and ware- 
 
33 
 
 housing facilities, and a large domestic and Ori- 
 ental trade. It was at this time, and no doubt to 
 enable them to make the purchase of the Charles 
 Pratt & Company, Philadelphia and Pittsburgh 
 properties, that the capital stock of the Standard 
 Oil Company of Ohio was increased from two 
 millions and a half to three millions and a half 
 of dollars its last increase. The value of the 
 property obtained through these acquisitions 
 was three millions of dollars (Vol. 16, p. 3082). 
 
 In 1875 the refineries of Porter, Moreland & 
 Co. and Bennett, Warner & Co. at Titusville 
 were acquired to strengthen their position as 
 refiners in the oil regions. In 1876 and 
 1877 they acquired a majority interest in the 
 refinery and business of J. N. Camden & Co. 
 at Parkersburg, West Virginia, which were 
 vested in the Camden Consolidated Oil Co., or- 
 ganized by them for that purpose ; a number of 
 refineries in Baltimore, which were vested in the 
 Baltimore United Oil Co., organized by them for 
 that purpose ; and a refinery on a small scale in Bos- 
 ton, Mass., with a New England trade which they 
 organized as the Maverick Oil Co. In 1877, they 
 acquired from the Producers Consolidated Land 
 and Petroleum Co. a small refinery at Bayonne, 
 
34 
 
 New Jersey, and some land at Communipaw on 
 which they shortly after constructed the refinery 
 known as the Eagle Works. 
 
 (7) Between 1870, when the Standard Oil Co. 
 of Ohio was organized, and 1877 the production 
 of crude oil had increased from 5,000,000 bar- 
 rels to 13,000,000, the yearly product being as 
 follows, in round figures : in 1870, 5,200,000 ; 
 
 1871, 5,200,000; 1872, 6,300,000; 1873,9,900,- 
 ooo ; 1874,10,000,000; 1875, 8,800,000; 1876, 
 9,000,000; and 1877, 13,000,000. (Deft.'s Ex. 
 265, Vol. 19, p. 624.) During the same years 
 the stocks of crude oil in storage had in- 
 creased from 537,000 barrels to 3,127,000 
 barrels, as follows, in round figures : 
 I8 7> 537>oo barrels ; 1871, 532,000 ; 
 
 1872, 1,084,000 ; 1873, 1,625,000 ; 1874, 3,705,- 
 ooo ; 1875, 3,550,000 ; 1876, 2,551,000 ; 1877, 
 3,127,000 barrels. It is clear, therefore, com- 
 paring the yearly production during these years 
 with the yearly stocks, that though there was a 
 great increase in the manufactured products it 
 was not equal to the supply of crude oil, and that 
 the great need was an increase of the consumption 
 and more markets. This was theparticular direc- 
 
35 
 
 tion that the efforts of the Standard Oil Co. took 
 during these years. It extended its own mar- 
 keting stations through various States, among 
 them Indiana, Illinois, Michigan, Wisconsin 
 and Minnesota. The men interested in it 
 organized The Consolidated Tank Line which 
 took over and extended the marketing business 
 of Alexander-McDonald & Co. in the southern 
 part of Ohio, Indiana and Illinois, and west of 
 the Mississippi, with headquarters at Cincinnati, 
 their interest in the Company being a half. 
 They also acquired an interest in the Waters- 
 Pierce Oil Co. which had a marketing business 
 in Missouri and the southwest. They organized 
 the Beacon Oil Company, which took over the 
 marketing business of Kidder, Vaughan & Co. 
 in New England, and acquired a large interest in 
 the marketing business of the Portland Kerosene 
 Oil Company, located at Portland, Maine. 
 
 They extended their operations to the manu- 
 facture and sale of lubricating oils in 1877 and 
 1878 by acquiring the lubricating plants of 
 the American Lubricating Oil Co. in Cleveland, 
 of the Mica Axle Grease Co. in Pittsburgh, of 
 the Payne, Ablett Co. near Pittsburgh, of the 
 Eclipse Lubricating Oil Co. at Franklin, and an 
 
36 
 
 interest in the Galena Oil Works and Signal 
 Oil Works, which were associated enterprises 
 engaged in the manufacture of lubricating oils 
 at Franklin, Pa. This extension of their busi- 
 ness enabled them not only to extend the market 
 for lubricating oils, but to utilize the residuum 
 at their various refineries remaining after the 
 production of refined oil for illuminating pur- 
 poses, as it is that residuum which is used in 
 the manufacture of lubricating oil. By these 
 various acquisitions they increased not only 
 their refining capacity to meet the increase in 
 the production of crude oil, but also the markets 
 for the various manufactured products. 
 
 (8) These, with the exception of the purchase 
 from the Empire Transportation Co. to be men- 
 tioned later, are the principal refinery and mar- 
 keting acquisitions in the years from 1872 to 
 1879. They were all separate, distinct and in- 
 dependent transactions occurring at different 
 times over this period of years. Each purchase 
 was the result of a voluntary negotiation between 
 the particular vendor and vendee. There was 
 no combination between the several vendors, or 
 any relation of any kind between the different 
 
37 
 
 transactions. Every feature is lacking of a com- 
 bined mass of transfers, in which the consumma- 
 tion of each would have been dependent upon the 
 consummation of all. There was no scheme for 
 these acquisitions as a whole, and no coercion. 
 
 It is probable that the purchase price of the 
 Charles Pratt & Co. business and the Pittsburgh 
 and Philadelphia refineries acquired at the be- 
 ginning of 1875, was paid in shares of the 
 Standard Oil Co. of Ohio, because at that 
 time occurred the last increase of its capital 
 stock from two millions and a half to three 
 millions and a half of dollars. In the other in- 
 stances the purchase price was largely paid in cash. 
 The usual course was either to pay in cash or to 
 organize a corporation to take over the property 
 purchased, such of the vendors as wished to be 
 paid in stock of the purchasing company taking 
 its stock, and such of them as wished to be paid in 
 cash receiving it from the proceeds of the shares of 
 the new company subscribed and paid for by per- 
 sons interested in the Standard Oil Co. of Ohio, 
 and acting for the stockholders of that Company, 
 for that purpose and to provide the necessary ad- 
 ditional capital. It may be mentioned here that 
 there is no evidence that any of the vendors 
 
38 
 
 were in any way restricted from engaging or em- 
 ploy ing their capital in the business in the future, 
 or of any restrictions of any kind being placed 
 upon them in that or any other regard. 
 
 (9) Pipe line acquisitions. 
 
 The conditions which prevailed in the earliest 
 years have already been mentioned in a general 
 way. The first stage was the building of gather- 
 ing lines by many different people without re- 
 gard to whether there were already sufficient 
 pipe line facilities or not. Wherever oil was 
 discovered and wells sunk more lines were laid 
 than were necessary. This was followed by rate- 
 cutting, loss, general demoralization and, in 
 many instances, insolvency. But a prompt, 
 adequate and orderly service was indispensable 
 both to producers and refiners. It was also 
 essential that the business should be remunera- 
 tive to attract capital to provide adequate service 
 and facilities for new oil territories as they were 
 discovered, and to provide tankage for the storage 
 of the surplus when the production exceeded 
 the demand. The pipe line situation must ob- 
 viously have been a matter of deep concern to 
 a large refiner as it affected the supply of the 
 raw material of his business. This was brought 
 
39 
 
 home to the Standard Oil Company in 1872 by 
 the embargo placed on its supply as an incident 
 of the excitement over the South Improvement 
 Company. It could not remain subject to similar 
 movements that might be inaugurated at any 
 time. The producers numbered many thousands, 
 and they were an unwieldy, excitable mass, who 
 never could nor did maintain steady measures for 
 the conservation of their business. There was 
 no reason why they should not have organized 
 an adequate pipe line and storage service, but 
 they never did so. It was absolutely neces- 
 sary that the Company should establish such 
 a relation with pipe lines that its supply 
 would be assured. There was therefore acquired 
 in the year 1873 a third interest in the firm of 
 Vandergrift & Forman, which then owned cer- 
 tain lines known as the United Pipe Lines, and 
 the capital stock of the American Transfer Com- 
 pany, which owned another system of lines. 
 Referring to Petitioner's Exhibit 770 (Vol. 10, 
 p. 1817) it appears that on September 4th, 1874, 
 there were at any rate nine of those pipe line 
 systems. The recital in that exhibit clearly 
 reveals the conditions which had existed. It is 
 as follows : 
 
40 
 
 " WHEREAS the pipe lines owned and 
 controlled by the parties hereto have a joint 
 capacity for transportation more than twice 
 as great as the total volume of petroleum 
 produced in the district traversed by said 
 lines ; and whereas the separate and dis- 
 cordant relations now prevailing among the 
 parties hereto lead to a needless multiplica- 
 tion of extensions, branches and other 
 matters involving a heavy cost, which ulti- 
 mately becomes in some shape a charge upon 
 the business transported, and also leads to 
 the offering of open or secret inducements 
 of an illegitimate nature, such as rebates, 
 special rates, selling oil for less than it costs 
 and full pipeage rates, and in other ways 
 thereby to attract an under (? " undue ") 
 share of traffic to the respective lines repre- 
 sented herein ; and whereas it is believed to 
 be desirable both for the interests of the 
 parties hereto and those of the public whom 
 they serve that all needless expenditure and 
 all illegitimate inducements should cease ; 
 now therefore for those purposes and for 
 other valuable considerations mutually mov- 
 ing the parties hereto they do each respect- 
 ively agree with each other as follows : " 
 
 This exhibit is a pooling agreement, common 
 at that time with transportation companies, fix- 
 ing a uniform rate of pipeage, providing for the 
 payment of the earnings of the various systems 
 
41 
 
 into a common fund, and fixing the proportion 
 of the fund to which each system should be 
 entitled. It appears from the loth article that 
 the United Pipe Lines above mentioned were to 
 be entitled to 29^ per cent, of the common 
 fund, and the American Transfer Company 7 
 per cent., which shows the extent of the Stand- 
 ard's pipe line interests at that time. 
 
 In 1877 the United Pipe Lines and some of the 
 other systems mentioned in Exhibit 770 were or- 
 ganized into a corporation, named the United Pipe 
 Lines, and a part of the lines of the American 
 Transfer Company were transfered to it, to vest 
 the gathering systems in the new company, and 
 the longer lines, more in the nature of trunk lines, 
 connecting the gathering systems with the rail- 
 roads, in the American Transfer Company. In that 
 year the pipe lines of the Empire Transportation 
 Company were acquired in the interest of the own- 
 ers of the Standard Oil Company through the 
 transaction to be mentioned later, and became a 
 part of the United Pipe Line system, thereby in- 
 creasing their interest in that company. In 1881, 
 the National Transit Company was organized by 
 the men interested in the Standard and others to 
 take over all the lines of the United Pipe Lines 
 
42 
 
 and the American Transfer Company, including 
 the trunk lines from the oil regions to Cleve- 
 land, to Buffalo and to the seaboard, which were 
 in process of construction. In 1882 the gather- 
 ing lines of the National Transit Company 
 amounted to 2,468 miles and the trunk lines to 
 1,062 miles, a total of 3,530 miles. In 1908 the 
 total mileage of the Standard's gathering lines 
 was 45,227 miles and its trunk lines 9,388 
 miles, a total of 54,615 miles, the difference, 
 with the exception of less than a thousand miles 
 representing construction by the company, or its 
 subsidiary companies at its instance and with 
 the capital it provided. (Archbold, Vol. 17, p. 
 3232 ; Defts. Ex. 261, Vol. 19, p. 621). 
 
 A glance at Defendant's Exhibit 265 (Vol. 19, 
 P. 624) shows what the demand for capital out- 
 lay in the construction of pipe lines and storage 
 facilities must have been between 1874 and 1882. 
 The production increased from 10,000,000 bar- 
 rels in 1874 to 30,000,000 in 1882, or to treble 
 the amount ; and during that time it extended 
 into Vest Virginia. The volume of Industrial 
 Statistics for 1892 issued by the Secretary of 
 Internal Affairs of the State of Pennsylvania, 
 shows that the stocks of crude oil increased from 
 
43 
 
 3,700,000 barrels in 1874 to 34,596,000 in 1882. 
 The tankage to store this vast increase was 
 enormous in its quantity and had to be pro- 
 vided. It was the ability to provide by the 
 outlay of many millions of dollars all this 
 necessary new construction of pipe lines and 
 tankage which accounts for the expansion of the 
 Standard's pipe line interests during those years, 
 as no other interest cared to run the risks of such 
 an investment. 
 
 It is scarcely necessary at this day to elab- 
 orate the fact that the ownership of an 
 adequate pipe line system, with its necessary 
 storage facilities, is an indispensable adjunct to 
 refining on a large scale. It is the pipes 
 that are in contact with the wells, and by their 
 means only is the refiner enabled to provide 
 his supply at the wells and regulate its storage 
 and transportation according to the needs of 
 his refineries. To be dependent upon others 
 for that storage and transportation would 
 introduce an element of uncertainty entirely 
 incompatible with the successful prosecution 
 of the business. This was demonstrated by 
 the early conditions in the history of the business, 
 and all subsequent experience has confirmed it. It 
 
44 
 
 is established beyond dispute by the fact that all 
 the present large and important refining interests, 
 which have no connection with the Standard Oil 
 Company, such as the Pure Oil Company, the 
 Gulf Refining Company, the Texas Company, the 
 National Refining Company of Cleveland and 
 the Union Oil Company of California have found 
 it necessary to have their pipe line systems (Re- 
 port of Commissioner of Corporations on Petrol- 
 eum Industry, August 5, 1907, Part 2, p. 637). 
 This is also true of Crew, Levick & Co. (Rec., 
 vol. 20, p. 107.) For the same reasons the owners 
 of the Standard Oil Co. acquired their pipe line 
 interests between 1873 and 1881. Since that 
 time, as has already been stated, the expansion 
 of the system with the exception of less than a 
 thousand miles, has been due to new construc- 
 tion to reach the new oil fields in Ohio, Indiana, 
 Illinois, Kansas, Missouri, Indian Territory and 
 Oklahoma as they were discovered and provide 
 the necessary storage facilities. 
 
 (9) Reference has been made to the Empire 
 Transportation Company in connection with the 
 acquisition of refineries and pipe lines, and we 
 will now take up that transaction. The Penn- 
 
45 
 
 sylvania Railroad always felt that it had a prior 
 claim on the transportation of oil because of its 
 proximity to the oil fields. It was the first com- 
 pany to give special attention to it by organizing 
 the Empire Transportation Company to furnish 
 with its tank cars a service exclusively devoted 
 to the transportation of oil. At an early day the 
 Empire Company, to further control the traffic, 
 acquired and established pipe line systems of its 
 own. Its next step was to acquire and operate 
 refineries and engage in the business of refining 
 oil. It acquired the ownership or control of the 
 Sone & Fleming Refinery at Brooklyn ; built a 
 refinery at Philadelphia ; and through a subsidi- 
 ary company, the National Storage Company, 
 acquired property for the same purpose at Com- 
 munipaw, New Jersey. This connection of the 
 Pennsylvania Railroad with the business of 
 refining oil aroused great antagonism in the 
 latter part of 1876 and the beginning of 1877, 
 particularly on the part of its rivals, the New 
 York Central and Erie companies, though the 
 Standard Oil Company joined in it. It was 
 charged that through this alliance of the Rail- 
 road Company with the pipe line systems and 
 refining interests of the Empire Transportation 
 
46 
 
 Company it could control not only the trans- 
 portation of oil as against rival railroads, but also 
 the refining of oil as against rival refiners, by 
 merging its transportation charges in the re- 
 fining profits. This led to a bitter war between 
 the railroads, in which the Standard Oil Com- 
 pany participated. It withdrew its oil traffic 
 from the Pennsylvania Railroad ; both pipe line 
 and railroad rates were cut; and every incident of 
 such a war was in full play for some time. This 
 state of affairs continued during most of the 
 year 1877. Finally the demoralization became 
 so extreme that an adjustment was reached 
 whereby the Empire Transportation Company 
 sold its refineries and pipe lines to the Standard 
 interests and its tank cars to the Pennsylvania 
 Railroad. This war is fully described both by 
 Mr. Rockefeller in his testimony and by Mr. 
 Cassatt in testimony which he gave in a case in 
 1879, and which the Petitioner has made a part of 
 the record. It was in this way that the Standard 
 interests came to acquire in October, 1877, the 
 Sone & Fleming refinery at Brooklyn and the 
 Philadelphia refinery of the Empire Transporta- 
 tion Company, and its pipe line system which was 
 transferred either to the United Pipe Lines or 
 
47 
 
 the American Transfer Company. It was a 
 separate transaction with its own features and 
 conditions, and followed as a consequence of the 
 Pennsylvania Railroad Company participating 
 in the business of refining oil to the detriment 
 of the other railroads and the refining interests. 
 
 (10) Stress is laid on the relations between 
 the Standard Oil Company and the rail- 
 roads between 1872 and 1880 ; and to the 
 alleged special rates and favors it received 
 from them is attributed its power to destroy the 
 business of its competitors and acquire their 
 properties. This is charged even with respect 
 to the acquisition of the Cleveland refineries in 
 1871 and 1872, but, as we have already said, 
 without any foundation. But certain later con- 
 tracts between it and the railroads are annexed 
 to the bill, and this operation and effect is 
 claimed for them. There is no basis for this claim. 
 
 Whatever was done is to be judged by the 
 standards, conditions and law of those days and 
 not by the standards, conditions and law of the 
 present time. It was a time of intense struggle 
 between the trunk lines for every kind of traffic, 
 with alternating short periods of agreed rates or 
 pooling. Schedule rates were merely nominal. 
 
48 
 
 Special contracts with shippers who could 
 command even a small volume of any par- 
 ticular kind of traffic were the custom. Shippers 
 went from railroad to railroad for the best terms 
 they could get, and railroads offered the induce- 
 ments of special rates or rebates to get the busi- 
 ness. The shipper who commanded a large and 
 steady volume of traffic insisted that he 
 was entitled to lower rates because of that 
 fact. There was legal authority justifying him 
 in making that claim. (See Nicholson vs. Great 
 Western Ry. Co., 4 C. B. (N. S.) 366 ; Cleveland 
 &c. R. R. Co. vs. Closser, 126 Ind., 348 ; Oxlade 
 vs. N. E. Ry. Co., i Ry. & Can. Traf. Cases, 72 ; 
 Root vs. L. I. R. R. Co., 1 14 N. Y., 300.) In other 
 words, it was recognized that a wholesale shipper 
 was entitled to a lower rate than a retail shipper; 
 that a refiner who could deliver to the railroad a 
 train-load of oil every day or every other day 
 was justified in insisting upon a lower rate than 
 a refiner who delivered smaller quantities at 
 irregular times which had to be transported in 
 trains made up of different species of traffic. 
 Indeed the contrary rule which prevails now 
 is an arbitrary protection of the smaller shipper, 
 and not founded on any principle of reason 
 or business. 
 
49 
 
 Whether the Standard Oil Company in the 
 earliest period obtained better rates than its 
 competitors there is no evidence to show. 
 There could be none because every ship- 
 per was making his own contracts for 
 rates and keeping them to himself. 
 It is fair to assume that in the main it got as 
 low rates as anybody, and lower than some be- 
 cause of the volume of its business ; but that was 
 an incident of the business and not an advantage 
 forged as a weapon of assault. 
 
 We turn now to the specific contracts during 
 this period which are annexed to the bill. 
 
 (a) Exhibits 3, 4 and 5 are contracts made 
 with the Erie and New York Central roads 
 in 1874 and 1875, relating in the main 
 to the operation of oil terminals, in the 
 one case at Weehawken, New Jersey, and 
 in the other, at Hunters Point, Long Island, 
 and on the Hudson River at or about Sixty- 
 fifth Street, and they were necessary and justifi- 
 able. The oil traffic was a special traffic which re- 
 quired special handling and facilities in ware- 
 houses on its arrival at destination. The 
 damage to the barrels in course of trans- 
 portation required cooperage or refilling in 
 
50 
 
 new barrels before being reloaded on lighters 
 to be taken to the various docks where they 
 were again unloaded for shipment by vessel. 
 The entire service was a distinctly special 
 service and the Standard Oil Company was 
 most interested in its proper performance be- 
 cause of the volume of its traffic. That was 
 the reason for these contracts whereby it as- 
 sumed to operate the terminals, consisting of 
 warehouses, and to make uniform charges to all 
 parties who used them or for whom services 
 were performed as low as any other oil yard 
 affording facilities " for the transfer, storage, 
 preparation and shipment of the oil at the 
 terminus of any railway, or other line competing 
 with the Erie Railway, at or adjacent to the port 
 of New York, and generally so to manage the 
 premises as to give all patrons of the road fair 
 and equal facilities for their oil business at uni- 
 form cost" (Bill, p. 210). 
 
 In the case of the New York Central the Oil 
 Company agreed to provide at Hunters Point 
 and on the Hudson River (Bill, p. 217) 
 
 a large and commodious warehouses, wharves 
 and piers, amply provided with tankage and 
 all the necessary appliances for the receipt 
 from the boats, barges and cars of the party 
 
51 
 
 of the second part (the railroad company) 
 of crude petroleum or the products of crude 
 petroleum ; the cooperage, warehousing and 
 delivery of the same to consignees in a 
 prompt and efficient manner, and to receive 
 upon the side tracks adjacent to its said 
 property at the foot of 65th Street all 
 crude petroleum which may be consigned to 
 that point and unload the same and deliver 
 the same to consignees on demand, doing 
 and performing in respect thereto all such 
 other things as the party of the second part 
 may be bound to do ; also to receive upon 
 the wharves of the party of the first part at 
 Hunters Point aforesaid all the products of 
 crude petroleum in packages, which may be 
 consigned to that point, and deliver the 
 same to consignees upon demand, doing 
 and performing in respect thereto all such 
 other things as the party of the second part 
 may be bound to do." 
 
 The terminals at Hunter's Point and at 65th 
 street on the Hudson River were owned by the 
 Standard Oil Company, and the Railroad Com- 
 pany was relieved by this arrangement from pro- 
 viding at its own expense other terminals for 
 shippers other than the Standard. 
 
 These contracts originated in a practical neces- 
 sity which justified them, and there is no evidence 
 that they operated injuriously to other shippers 
 or refiners. 
 
52 
 
 It is to be observed that the contract of April 
 17, 1874, is an instance of a special contract for 
 rates. (Bill, p. 208). The Railroad company was 
 to furnish the cars and haul them to its Wee- 
 hawken yards in full trains whenever practica- 
 ble. The rates of freight were to be made by 
 the President of the Atlantic and Great Western 
 Railroad Company, the Erie's western connec- 
 tion, and the Oil Company, to the satisfaction of 
 the former, and were not to be higher than the 
 rates paid by competitors of the Oil Company 
 from competiting western refineries to New York. 
 The Oil Company was not to ship more than 50 
 per cent, of the product of its refineries by any 
 other lines eastward ; it assumed all risks of 
 losses by fire, natural leakage or breakage ; and 
 it was itself to load the trains at the place of ship- 
 ment and unload them at the place of destina- 
 tion. Thus it did its own loading and unloading, 
 assumed unusual risks, and its traffic moved in 
 trainloads. 
 
 (b) Exhibit 6, dated October ist, 1874, is an 
 agreement between the Pennsylvania, New York 
 Central and Erie Companies pooling the oil 
 traffic from the oil regions to New York via the 
 three trunk lines, and to Philadelphia and Balti- 
 
53 
 
 more via the Pennsylvania Railroad. The New 
 York proportion was fixed at 62.46 per cent, of 
 the total, in which each of the companies was to 
 share equally. The Philadelphia and Baltimore 
 proportion was fixed at 37.54 per cent., to all of 
 which the Pennsylvania Railroad was entitled. 
 The rates on refined oil from Cleveland, Pitts- 
 burg and the oil regions to New York, Phila- 
 delphia, Baltimore and Boston, and the rates on 
 crude oil to the same points were prescribed. 
 Particular exception is taken to the following 
 provision (Bill, p. 222) : 
 
 u The roads transporting the refined oil 
 shall refund to the refiners as a drawback 
 the charges paid by them upon the crude 
 oil reaching their refineries by rail ; and the 
 roads transporting through crude oil to the 
 eastern seaboard shall refund to the shippers 
 22 cents per barrel ; both of said drawbacks 
 to be paid only on oil reaching the initial 
 points of rail shipment through pipes the 
 owners of which maintain agreed rates of 
 pipeage, it being understood that the said 
 rates of pipeage shall be equitably adjusted 
 as between the several railroads, and that 
 they shall set forth in a contract to be en- 
 tered into between each pipe line and the 
 trunk lines parties hereto ; said agreed rates 
 
54 
 
 of pipeage being of importance to the parties 
 hereto and constituting a valuable considera- 
 tion to them." 
 
 Upon which we observe : 
 
 (1) That the provision to refund to the refiner 
 the freight on the crude oil was to make u a 
 group rate " for refined oil from Cleveland, 
 Pittsburg and the oil regions to the seaboard, 
 placing them all on an equality, which was a 
 usual and established practice with respect to 
 many similar kinds of traffic. The objection 
 made to this provision could be made to every 
 " group rate " that has ever been established. 
 
 (2) The provision for the refund of 22 cents a 
 barrel on the crude oil transported to the sea- 
 board was to place the seaboard refineries on an 
 equality with the inland refineries. Thus the 
 rate on refined oil from Cleveland to New York 
 was, according to the contract, $1.90 per barrel, 
 less the crude rate of 35 cents per barrel from the 
 oil regions to Cleveland. As a barrel of refined 
 was the equivalent of one and one-third barrels 
 of crude the amount to be deducted would be 35 
 cents plus one-third of 35 cents, or n.666 cents, 
 making a total of 46.666 or 47 cents. De- 
 ducting that sum from the rate on refined oil 
 
55 
 
 would make the rate to New York $1.43. 
 Refunding to the seaboard refiner 22 cents a 
 barrel his rate of $1.65 for crude oil would 
 be reduced to $1.43. Thus the rate on a 
 barrel of refined oil from Cleveland to the sea- 
 board was made the same as the rate on a barrel 
 of crude oil from the oil regions to the seaboard, 
 and thereby the refiners at Cleveland and the 
 refiners at New York were put on an equal 
 basis. 
 
 (3) The last clause of the provision respecting 
 the drawbacks being paid only on oil reaching 
 the initial points of rail shipment through pipes 
 the owners of which maintained agreed rates of 
 pipeage was necessary for two reasons ; first, 
 to maintain uniform pipeage rates, and second, 
 to guard against the drawbacks being used as a 
 fund for rebates between the pipe line companies 
 and the shippers at the expense of the railroad 
 companies. Petitioner's Exhibit 770 (Vol. 10, 
 p. 1817) shows that the sum of 22 cents men- 
 tioned in this agreement was the charge for 
 pipe line transportation, and it was manifestly 
 absorbed in the railroad rates prescribed by the 
 agreement. Necessarily it should only be re- 
 
56 
 
 funded when it had been paid, and it would only 
 be paid if the agreed pipeage rates were main- 
 tained. 
 
 (c) The agreement between the Standard Oil 
 Company and the Pennsylvania Railroad of 
 October 17, 1877 (Bill, p 227) ; in connection 
 with which it is averred that there were similar 
 contracts with the New York Central and Erie 
 Companies (Bill, pp. 31 and 32). These contracts 
 were what is known as " evener " contracts and 
 were common in the railroad practice of that time. 
 One of the methods then in vogue to avoid the 
 enormous losses from rate wars among the rail- 
 roads was an agreement apportioning the heaviest 
 kinds of traffic, such as grain, cattle and oil, be- 
 tween them in fixed proportions ; and to make 
 such an agreement effective one or more of the 
 heaviest shippers were selected to so arrange 
 their business and apportion their shipments as 
 to maintain the proportions fixed. For that 
 service they were paid a commission. The 
 Standard Oil Company as the heaviest shipper 
 of oil was made the u evener " in connection with 
 the pooling agreement between the railroads of 
 October, 1877, and that was the purpose of this 
 agreement, Exhibit 7, and the agreements of 
 
57 
 
 similar tenor with the other trunk lines. Dr. 
 Leonard Bacon has said of this method: 
 
 " The delegating of this task of evener to 
 the largest of the concerns engaged in ship- 
 ping by the competing lines seemed by com- 
 mon consent, at that stage in the evolution 
 of the railroad system, to be a necessary ex- 
 pedient for the operating of a " pool " for 
 the ending of destructive railroad wars. In 
 the livestock pool between the trunk lines 
 from Chicago to New York in 1875, the 
 allowance to the heavy Chicago house that 
 undertook the task of evener was to be $15 
 for each carload by whomsoever shipped. It 
 was a crude method liable to serious ob- 
 jections, and yet, to the railroad men of that 
 day it had this in its favor, that no better 
 way had then been devised for avoiding the 
 evils and abuses far more damaging to all 
 the interests concerned, including the public 
 interest, than this method of the pool and 
 the evener" 
 
 (d) The contracts between the American Trans- 
 fer Company and the Pennsylvania Company 
 and other trunk lines respecting the payment of 
 first, 20 cents, and then 22^/2 cents, a barrel on 
 all crude oil transported by the railroads (Bill, 
 PP- 33, 34 ; Exhibit 8, p. 231 ; Exhibit 9, p. 234). 
 
 It is to be observed that this is a contract be- 
 tween transportation companies. The American 
 
58 
 
 Transfer Company had pipe lines of its own and 
 represented the lines of the United Pipe Lines. It 
 gathered and bought oil at the wells, transported 
 it to the railroad junction points, and largely con- 
 trolled the line of its railroad transportation. It 
 built lines and provided facilities at the instance, 
 and for the benefit, of the various railroads. 
 (See statements in both contracts.) The trans- 
 portation of crude oil from the wells to the point 
 of destination was thus a joint service of the 
 Railroad companies and the American Transfer 
 Company and the pipe lines it controlled, and 
 the burden of providing the facilities to make 
 the necessary railroad connections fell upon the 
 Transfer Company. The Transfer Company 
 evidently deemed that it was entitled to the com- 
 pensation provided by these contracts for its 
 share in the joint service, in obtaining and 
 furnishing the traffic, and in providing the facili- 
 ties, and there is nothing in the record to im- 
 peach at this distance of time the fairness of its 
 claim or the measuring of the compensation by 
 the total crude shipments, all, or practically all, 
 of which it would seem were received by the rail- 
 roads through the lines of the Transfer Com- 
 pany. 
 
59 
 
 (e) It is charged that at this time an additional 
 15 cents per barrel on shipments of crude oil was 
 allowed to the Standard Oil Company as a further 
 rebate. (Bill, p. 35). Mr. Cassatt in his testi- 
 mony given in March, 1879, explains that this 
 reduction of the rate was made at a conference 
 of railroad presidents in July, 1878, to meet a 
 rate that had been made via Buffalo and the Erie 
 Canal ; that it was only in force until the closing 
 of the canal in December of that year ; and that 
 it was not made exclusively to the Standard Oil 
 Company but to any shippers who were not 
 shipping over the line via Buffalo and the canal. 
 (Vol. 20, pp. 12, 13, 19, 30, 31). 
 
 ( /) There is no substantial evidence that these 
 contracts, rates, reductions and allowances which 
 we have reviewed had any relation to the ac- 
 quisitions of refining and pipe line properties by 
 the Standard Oil interests during these years. 
 They certainly did not induce the sale of the 
 Cleveland refineries, of the Charles Pratt & 
 Company refinery, of the Atlantic Refining 
 Company's refinery, and the other refineries at 
 Pittsburg and Philadelphia represented by 
 Warden, Frew & Company, the Imperial Re- 
 finery at Oil City, the refineries of Porter, More- 
 
60 
 
 land & Company and Bennett, Warner & Com- 
 pany, at Titusville, the refineries and pipe lines 
 of the Empire Transportation Company, the 
 refinery of the American Lubricating Oil Com- 
 pany, the refineries at Parkersburg and Balti- 
 more, or the interest in the Galena and Signal 
 Companies ; and these constitute the great bulk 
 of the acquisitions during those years. The 
 owners of those establishments were not forced 
 to sell because the Standard obtained better rail- 
 road rates than they could get, or under compul- 
 sion of any kind. Doubtless various small re- 
 fineries at different points, particularly in the 
 oil regions, that were not equipped to compete 
 successfully, and the owners of which could not 
 find the capital to make the improvements ne- 
 cessitated by the progress of the business, or for 
 other reasons of that kind, were desirous 
 of selling, and did sell, were purchased not 
 for their refining capacity but because they 
 had a certain amount of trade, and the physical 
 property could be utilized in connection with 
 other refineries. This was all the dismantling 
 there has ever been of independent refineries. 
 These have been called purchases " to put them 
 out of business," and it is deemed to be evi- 
 
61 
 
 dence enough of that motive that some of them 
 were dismantled ; but the fact is just as we have 
 stated it. 
 
 Bxcepting some very general and vague state- 
 ments there is no evidence in the record 
 showing or tending to show any causal con- 
 nection between the railroad rates which the 
 Standard obtained between 1870 and 1882 and 
 its acquisitions during that period. 
 
 (n) The period of these acquisitions extended 
 from 1871 to 1879. The Cleveland refineries 
 were acquired by, and conveyed to, the Standard 
 Oil Company of Ohio. All the other properties 
 were acquired for the stockholders of that com- 
 pany. The earnings of the Company over and 
 above a moderate annual dividend, represent- 
 ing the margin between a legitimate manufact- 
 uring profit in a business of that hazardous 
 character and such a dividend, instead of 
 being paid out in dividends to the stock- 
 holders were used to acquire these prop- 
 erties for their benefit. When physical 
 properties were acquired they were conveyed to 
 individuals in their behalf. When stocks of cor- 
 porations were acquired, or stocks of new com- 
 
62 
 
 panics organized to take over properties were 
 subscribed and paid for, they were taken in 
 the names of individuals for the same purpose. 
 In 1879 the title to these properties and stocks, 
 all held in such undivided common ownership, 
 was vested in three trustees by an instrument 
 which is found in the record (Deft.'s Ex. 257, 
 Vol. 19, pp. 618-620). It is known as the Vilas, 
 Keith and Chester agreement. It was an ex- 
 ecuted transfer of all these properties and stocks 
 by the individuals who held them on behalf of 
 the stockholders of the Standard Oil Company 
 of Ohio to Vilas, Keith and Chester as trustees 
 in trust, to hold, control and manage them for 
 the exclusive use and benefit of the persons 
 named in the agreement, and in the pro- 
 portions therein stated, and to divide and 
 distribute them as soon as it could con- 
 veniently be done between the beneficiaries 
 in the proportions stated. The beneficiaries 
 were the stockholders of the Standard Oil 
 Company of Ohio, and their respective pro- 
 portions were the proportions in which 
 they owned the stock of that company. It 
 thus appears that the individuals who were 
 the stockholders of the Standard Oil 
 
63 
 
 Company of Ohio owned these properties and 
 stocks from the time of the several acquisitions 
 in an undivided common ownership. Hence 
 the concerns and businesses acquired were not 
 after their acquisition independent or competitive 
 concerns. 
 
 (12) In January, 1882, the so-called Standard 
 Oil trust was constituted (Bill, pp. 40-51). The 
 parties to that agreement are embraced in three 
 classes. The second class is made up of certain 
 named individuals, who were the stockholders 
 of the Standard Oil Company of Ohio and 
 the owners of the corporations named in the first 
 class in their entirety, and of a part of the shares 
 of the corporations named in the third class, 
 and, with a few exceptions, of the major part. // 
 was not an agreement bringing together independ- 
 ent competing concerns separately owned, but an 
 agreement between common owners of various 
 properties for the purposes therein expressed. It 
 did not affect the relations of the properties to 
 each other or unite them in any different owner- 
 ship than had existed before. After the agree- 
 ment was executed the same ownership interests 
 in all the properties were represented by trustees' 
 
64 
 
 certificates as they Had previously been repre- 
 sented by shares of the Standard Oil Company 
 of Ohio and the Vilas, Keith and Chester trust. 
 It was purely an arrangement between the com- 
 mon owners of various properties and stocks 
 concerning the form in which the legal title to 
 the properties and stocks should be held and the 
 interest of the real owners be evidenced, as dis- 
 tinguished from a combination of different com- 
 peting properties and businesses separately and 
 independently owned. 
 
 (13) At this time these properties in common 
 ownership consisted of refineries at Cleveland, 
 Oil City, Titusville, Buffalo (acquired in 1882), 
 Pittsburg, Philadelphia, Parkersburg, Baltimore 
 and the Atlantic seaboard in and about New York 
 harbor ; of the pipe line system which has been 
 described, and of marketing organizations in 
 various parts of the country. Naturally after 
 the acquisition of these properties the main 
 process was one of their unification and in- 
 tegration into a single business to secure 
 efficiency and economy. The acquisitions 
 after this time were of minor importance and 
 have no material bearing on the questions in- 
 
65 
 
 volved in this case. The structure of the organ- 
 ization was not affected by them one way or the 
 other, and its history would have been the same 
 without them as with them. But there was con- 
 stant internal expansion and development as 
 markets were established all over the world 
 and the use of the products increased. Existing 
 refineries were enlarged and new refineries were 
 built at places best adapted for the economical 
 distribution of the products. As new oil fields 
 were discovered the pipe line systems were 
 extended to supply their needs ; and mar- 
 keting stations, consisting of tanks for 
 the storage of oil and tank wagons for 
 its distribution, were established all over the 
 country. Tank steamers were provided for 
 the transportation of the products to countries 
 in every quarter of the globe, and marketing 
 stations were established there for its stor- 
 age and distribution. The development along 
 all these lines has been the result of growth 
 and expansion, and not of combination or ac- 
 quisition. The period of acquisition substan- 
 tially stopped as early as 1879, thirty years 
 ago. 
 
66 
 
 The most marked feature of this development 
 during the past fifteen years has been the 
 marketing of the oil all over this country by 
 the Company itself. Previous to that time it 
 had relatively few marketing stations and sold 
 principally to jobbers who dealt with the re- 
 tailers. The jobber made his own prices and 
 the retailer was at his mercy. After the new 
 system was inaugurated, and the Company dealt 
 directly with the retailer by multiplying its 
 marketing stations and expanding its system of 
 tank wagon deliveries, the jobber was neces- 
 sarily eliminated from the trade as a mid- 
 dleman whereever the system reached. These 
 jobbers had plants consisting of storage 
 tanks and delivery wagons, and cus- 
 tomers along the routes which were traversed 
 by their wagons. They retired from the busi- 
 ness to a very large extent as the Company 
 established its own marketing stations and 
 the middleman's profit disappeared, and their 
 plants and the good-will of their routes were 
 for sale, and the Company bought them. Such 
 acquisitions were numerous all over the country, 
 but they were a natural incident in the in- 
 evitable development of the business and not 
 
67 
 
 the result of an unnecessary movement simply 
 to displace the jobber as a competitor. 
 
 How complete the structure of the Standard 
 Oil organization was in 1882 is apparent from 
 its structure at the present time. The Bayonne 
 works and the Eagle works at Cummunipaw, the 
 two principal refineries of the Standard Oil Co. 
 of New Jersey, date back to 1877. Its works 
 at Parkersburg and its Baltimore works date back 
 to the same time, and its Atlas works at Buffalo 
 to 1882. The chief works of the Standard Oil 
 Co. of New York are the Pratt works in 
 Brooklyn, the Queens County works, the Sone 
 & Fleming refinery, and the Long Island works, 
 which all date back to the period between 1872 and 
 1877. The refineries of the Standard Oil Co. 
 of Ohio at Cleveland date back to 1870 and the 
 period between that year and 1877. The 
 refineries of the Atlantic Refining Co. at 
 Philadelphia and at Pittsburgh and its Eclipse 
 works at Franklin date back to the same years. 
 The Vacuum Oil Works at Rochester and Olean 
 date back to 1879 or thereabouts. The interest 
 in the Galena Signal Oil Works dates back to 
 1879. 
 
68 
 
 The remaining refineries, being those at 
 Whiting, Ind., at Sugar Creek in Missouri, and 
 Wood River in Illinois, of the Standard Oil Co. 
 of Indiana; the refinery at Neodesha, Kan. of 
 the Standard Oil Co. of Kansas ; the refinery at 
 Lima, O. of the Solar Refining Co., and the re- 
 finery at Richmond Cal. of the Standard Oil 
 Co. of California, are all creations of the Stand- 
 ard organization since 1882. 
 
 The pipe line system so far as any of it was 
 acquired, with the exception of less than a thou- 
 sand miles, dates back to the period between 
 1873 and 1881 ; and the foundations of the mar- 
 keting system in the various regions of this 
 country were laid during the same period. 
 
 The organization is in all the main features 
 of its structure a creation of the period between 
 1870 and 1 88 1 ; and, in the main, prior to 1879. 
 
 (14) In 1892 the so-called Standard Oil Trust 
 was dissolved as a result of the decision of the 
 Supreme Court in the State of Ohio vs. The 
 Standard Oil Company (49 Ohio St., 137). No 
 change of ownership followed from this step. 
 The real owners of the properties before the dis- 
 solution were the certificate holders, who were 
 
69 
 
 originally the stockholders of the Standard Oil 
 Company of Ohio. The plan of dissolution 
 was for the trustees to assign to the cer- 
 tificate holders their proportionate shares of 
 all the property and stocks held by the trustees. 
 A part of the certificate holders at once 
 surrendered their certificates and received as- 
 signments of their respective proportionate 
 shares, and on their surrender to the various 
 companies of these assignments received the 
 shares of stock of each to which they were en- 
 titled. The shares of those who did not sur- 
 render their certificates continued to be held for 
 them by the trustees. There was no change 
 of the common ownership except as one person 
 might be substituted for another on a transfer 
 of certificates. There was no separation of the 
 ownership of the shares of the different com- 
 panies either by those who surrendered their 
 certificates or those who continued to hold 
 them. As separate shares they were un- 
 marketable, because each company was simply a 
 part or member of an organism though a 
 distinct legal entity with its own officers to 
 manage its affairs. Those who had exchanged 
 their assignments from the trustees for shares 
 
70 
 
 continued to hold their shares in a mass, just as 
 the shares of those who did not surrender their 
 certificates continued to be held by the trustees 
 for them in a mass. There was no change in the 
 conduct of the business as a unit. The function 
 in the business as a whole, say of the Stand- 
 ard Oil Company of New York, continued just 
 the same after the dissolution as before, 
 and the same is true of all the other companies. 
 Every owner, whether in possession of shares 
 of the respective companies or in possession of 
 trustees' certificates, was after as before the dis- 
 solution the owner of a fixed proportionate part 
 of all the companies and properties. 
 
 (15) This was the situation in 1899 when the 
 capital stock of the Standard Oil Company (of 
 New Jersey) was increased. All the owners 
 then owned precisely the same proportion of the 
 shares of the Standard Oil Company (of New 
 Jersey) that they did of the shares of each 
 of the other companies. In 1899 they trans- 
 ferred all their shares in the various com- 
 panies to the Standard Oil Company of New 
 Jersey, and received for the proportion of the 
 shares which had been represented by a trust 
 
71 
 
 certificate a share of the common stock of the 
 Standard Oil Company (of New Jersey). In 
 other words, the owners of the shares of these 
 various companies, all of which were owned by 
 the same owners in the same proportions, trans- 
 ferred their shares to one of the com- 
 panies in the common ownership, and received 
 for them its shares in precisely the same 
 proportion. No other change was effected 
 than that, and that was not a change 
 in the real ownership of the companies, but 
 merely in the form of its evidence. Each 
 share of the Standard Oil Company's stock 
 represented what a trustee's certificate had 
 represented, and after the transfer was made 
 the individual instead of holding a trustee's 
 certificate held a share of the Company. After 
 the transfer the stockholders of the Standard 
 Oil Company (of New Jersey) owned all these 
 properties which before that they had owned as 
 holders of trustee's certificates, and, before the 
 formation of the trust, as stockholders of the 
 Standard Oil Company of Ohio. The business 
 of the companies and their relations to each 
 other were absolutely unchanged. There was 
 
72 
 
 therefore in this step no combination of pre- 
 viously independent competing companies. There 
 has been the same common ownership since the 
 acquisition of the separate concerns in the seven- 
 ties ; the changes have only been in the form of 
 the evidence of that ownership. 
 
 Summary of Facts Bearing on Monopoly. 
 
 (1) There has not been at any time, with 
 possibly one or two trivial exceptions, any ex- 
 clusion of the capital or energies of others from 
 participation in the business by restrictive agree- 
 ments in connection with the acquisition of 
 plants and properties, or otherwise. The whole 
 domain of the business, from the production of 
 the crude oil to the marketing of the manufac- 
 tured products, has always been open to every- 
 body. 
 
 (2) The Standard has never owned or con- 
 trolled more than a small part of the production 
 of crude oil in the various oil fields. It was not 
 engaged in production at all until the year 1889. 
 Since and including that year the following 
 
73 
 
 figures show its percentage of the whole produc- 
 tion year by year : 
 
 Year. Per Cent. Year. Per Cent. 
 
 1889 15.90 1898 33-5 
 
 1890 24.05 1899 3 T -68 
 
 1891 26.22 1900. 3 x -27 
 
 1892 24.12 1901 27.13 
 
 1893 28.84 1902 20.10 
 
 1894 28.17 1903 , 17.24 
 
 1895 30.12 1904 1444 
 
 1896 28.76 1905 11.24 
 
 1897 28.71 1906 1 1. 1 1 
 
 Deft.'s Ex. 266, Vol. 19. 
 
 In 1907, out of a total of 170,717,593 barrels, 
 its production was 17,896,141, or 10^ per cent v 
 These figures show that for years there has been 
 a steady decrease in its proportion. 
 
 (3) The wide distribution of the oil fields has 
 furnished the amplest opportunity for participa- 
 tion in the business, both with respect to the 
 location of refineries and pipe line construc- 
 tion. Oil is produced in considerable quanti- 
 ties in fourteen or fifteen States. Defendant's 
 Exhibit 265 (Vol. 19, p. 624), compiled from a 
 Government publication, shows the locations of 
 
74 
 
 the oil fields. Down to 1876 production was 
 confined to Pennsylvania and New York. The 
 Lima-Indiana, Mid-Continent, Texas, California 
 and Illinois fields have been discovered from 
 time to time in subsequent years. The produc- 
 tion of Pennsylvania, New York, West Vir- 
 ginia, Kentucky, Tennessee, Kansas, Indian 
 Territory, Oklahoma and Illinois, though 
 varying in quality, is refinable by the ordi- 
 nary processes, while a considerable propor- 
 tion of the production of California, Ohio, 
 Indiana, Texas and Louisiana is only re- 
 finable by special processes. This is a very 
 different situation from a limited and confined area 
 of production favoring concentration of refining 
 points and pipe line facilities. Actual experi- 
 ence has demonstrated that there has been no 
 obstacle to the establishment of refineries with 
 access to the various oil fields, with or without 
 their own pipe line facilities, or to the employ- 
 ment of capital in the construction of pipe lines 
 by any one who cared to engage in the business. 
 (4) The increase in the production of crude 
 oil is a marvelous record and one quite fatal to 
 the allegations of monopoly. At the time of the 
 organization of the Standard Oil Co. of Ohio in 
 
75 
 
 1870 the total production had for the first time 
 reached 5,000,000 barrels in one year. The 
 10,000,000 barrel mark was reached in the year 
 1874 ; the 20,000,000 in 1880 ; the 30,000,000 
 (permanently) in 1889 ; the 40,000,000 in 1890 ; 
 the 50,000,000 in 1891 ; the 60,000,000 in 1896 ; 
 the 70,000,000 in 1901 ; the 80,000,000 in 1902; 
 the 100,000,000 in 1903 ; the 120,000,000 in 
 1904; the 130,000,000 in 1905 ; the 170,000,000 
 in 1907, and the 180,000,000 in 1908. 
 
 The increase is further emphasized by the 
 table No. 266, entitled " Statistical Record of the 
 Progress of the United States, 1800 to 1907, " 
 found in the Statistical Abstract of the United 
 States for the year 1907, issued by the Depart- 
 ment of Commerce and Labor, under the heading 
 "Production of Principal Commodities." In that 
 table petroleum is given year by year, and the 
 following figures are taken from it: 
 
 Year Gallons 
 
 1870 220,951,290 
 
 l8 73 415,539,012 
 
 1882 1,281,454,860 
 
 1899 2,396,975,700 
 
 5,312,745,312 
 
76 
 
 The figures for 1908 also show the wide dis- 
 tribution of the oil producing fields. They are : 
 
 Field. Barrels (42 Gallons) 
 
 Pennsylvania (including New York 
 
 and part of Ohio) 25,053,810 
 
 Lima (part of Ohio, Indiana) 10,005,547 
 
 Mid-continent (Kansas, Oklahoma) . . . 48,488,43 2 
 
 Illinois 34,019,708 
 
 Gulf Coast (Texas and Louisiana)... 16,906,850 
 
 California 48,306,737 
 
 Other production 400,000 
 
 Total 183,181,084 
 
 With such an increasing and widely dis- 
 tributed output of the raw material the coercive 
 monopolization of its products is almost incon- 
 ceivable. 
 
 (5) The enormous internal growth and expan- 
 sion of the Standard since 1882 through the 
 building of new works, the enlargement of exist- 
 ing ones, the new construction of pipe lines, and 
 the expansion of its markets and marketing 
 facilities, account for the size and extent of its 
 business, and not the acquisition of competitive 
 plants. 
 
77 
 
 It was not until the year 1872 that the pro- 
 duction of crude oil reached 5,000,000 barrels. 
 Between that time and 1882 it increased to about 
 25,000,000 barrels, and all of its principal acqui- 
 sitions of refineries and pipe lines were before 
 1882. It is true that the production in 1882 was 
 30,000,000 barrels, but it fell again in the suc- 
 ceeding years to less than 25,000,000. Even 
 this production exceeded the consumption as it 
 appears by the volume of Industrial Statistics 
 for 1892 issued by the Secietary of Internal 
 Affairs of the State of Pennsylvania that the 
 stocks of crude oil increased from 1,084,423 in 
 1872 to 34,596,612 in 1882, largely because of 
 the enormous production in the years 1880, 
 1881 and 1882. In 1882 the Standard, in 
 addition to its refineries at Cleveland, had 
 established itself as a refiner at Philadelphia, 
 Pittsburgh, Titusville, Oil City, Franklin, 
 Parkersburg, Buffalo, Olean, and on the At- 
 lantic Seaboard around New York harbor and 
 at Baltimore. At that time the value of its re- 
 fineries and manufacturing properties was $17,- 
 000,000, and its consumption was, as appears 
 by Defendant's Exhibit 268, 16,592,593 barrels. 
 From time to time after 1882 it enlarged its ex- 
 
78 
 
 isting works, and built new refineries at Marcus 
 Hook, Lima, Ohio, San Francisco, Whiting, 
 Ind., Sugar Creek, Mo., and Neodesha, Kan., 
 and in 1906 the total value of its refining 
 plants had increased to $57,689,560 (Deft.'s 
 Ex. 269, Vol. 19, page 627), and its consump- 
 tion to 65,000,000 barrels (Deft.'s Ex. 268). 
 
 The situation in California may be cited as a 
 striking illustration of this internal expansion. 
 In 1900 the Pacific Coast Oil Co. had about fifty- 
 six acres of land which were supposed to be 
 good for producing purposes ; a small refinery 
 at Alameda ; a small pipe line about forty miles 
 long ; and a small bulk steamer. The capacity 
 of the refinery was about 260 barrels of crude 
 oil a day. The pipe line ran from the oil pro- 
 ducing field to the coast at Ventura, about two 
 or three hundred miles from the refinery at Ala- 
 meda. The Company's stock and property were 
 purchased by the Standard in that year for 
 $760,000. It then constructed a refinery at 
 Richmond, Cal., utilizing as much of the ma- 
 terial of the Alameda refinery as it could, which 
 has a capacity of 28,000 to 30,000 barrels of 
 crude oil a day. A pipe line 350 to 400 miles 
 in length was built in the years 1902 and 1903 
 
79 
 
 to the refinery from the oil fields which had been 
 recently discovered in an entirely different region 
 of California from that tapped by the short pipe 
 line of the Pacific Coast Oil Co. In 1900 the 
 total production of crude oil in California was 
 4,329,950 barrels, and in 1907 it was over 
 40,000,000 barrels. California crude could not 
 in 1900 be refined into a marketable article, 
 and its product was only saleable by mixing it 
 with eastern refined oil in the proportion of 30 
 per cent, of California refined to 70 per cent, of 
 eastern oil. The Standard, through its chemists, 
 invented a process for the successful refining 
 of the native oil into a merchantable article, and 
 now, through its efforts, all the Pacific Coast 
 trade and a large Oriental trade are supplied 
 with oil manufactured from California crude. 
 The domestic trade amounted in 1902 to 40,259 
 barrels ; in 1903 to 161,889 ; in 1904 to 243,471 ; in 
 *95 to 359>337; 11119061:0346,390; and in 1907 
 to 440,856 barrels. The export trade was in the 
 year 1904, when it began, 61,342 barrels; in 
 1905, 271,900 barrels; in 1906, 878,874 barrels, 
 and in 1907, 1,161,162 barrels. 
 
 The Pacific Coast Oil Co., as we have said, 
 was purchased in 1900 for $761,000.00 After- 
 
80 
 
 wards its name was changed to the Standard Oil 
 Company of California. Its net assets on De- 
 cember 3ist, 1906, were $21,329,952.00. The 
 authorized capital of the Company is now $25,- 
 000,000.00, of which $17,000,000.00 have been 
 issued, the whole of which was paid for in cash 
 at par by the Standard Oil Co. (of New Jersey). 
 In other words, the Standard Oil Company (of 
 New Jersey), has contributed the original pur- 
 chase price and $17,000,000.00 of additional 
 money in the development of the business in 
 California. (Tilford, Vol. 17, pp. 3488, 3496, 
 3522 and 3523). The California Company has 
 only paid dividends in the years 1906, 1907 and 
 1908 ; in 1906 and 1097 at the ra ^ e f 6 per 
 cent., and in 1908, at the rate of 10 per cent. 
 
 Defendant's Exhibit 284, Vol. 19, page 683, 
 shows that in 1902 the Standard Oil purchased 
 in California 3,000,000 barrels out of a total 
 production of 14,000,000; in 1903, 6,000,000 
 out of a total of 24,000,000 ; in 1904, 
 9,500,000 out of a total of 29,700,000 ; in 1905, 
 9,500,000 out of a total of 34,000,000 ; in 1906, 
 9,500,000 out of a total of 32,500,000, and in 1907, 
 9,000,000 out of a total of 40,000,000 ; and that 
 its own production was in 1902 113,778 barrels; 
 
81 
 
 in 1903, 91,133; in 1904, 121,994; in 1905, 
 97,205 ; in 1906, 59,556, and in 1907, 624,000 
 barrels. 
 
 What it has accomplished there by the size of 
 its own undertaking conld have been accom- 
 plished by any one with the same energy and 
 enterprise and willing to take the risks of such 
 an investment ; and others are now actually fol- 
 lowing in its wake, notably the California 
 Petroleum Refineries, Ltd., with its refinery with 
 a capacity of 2,500,000 barrels of crude per 
 vear. 
 
 In 1882 the total Standard pipe line mileage 
 was 3,531 miles, divided between gathering lines 
 2,468, and trunk lines 1,062.95. I n I &99 itsltotal 
 mileage had increased to 14,653, of which 
 10,749 miles were gathering lines and 3,904 
 trunk lines. In 1908 the total mileage was 
 54,616, of which 45,227 were gathering lines and 
 9,388 were trunk lines. Less than a thousand 
 miles of this increase were acquired by pur- 
 chase from others. The balance was all new 
 construction of its own. After 1882 the trunk 
 lines were completed to the seaboard at Bayonne, 
 New York, Philadelphia and Baltimore ; gather- 
 
82 
 
 ing lines were built for the Lima-Indiana and 
 Illinois fields, with a trunk line to Chicago ; 
 for the great Mid-continent field, with a trunk 
 line to Whiting, and for the California field. 
 (Deft's Exhibit 262, Volume 19, following page 
 621, graphically illustrates the increase of the 
 pipe line mileage during the period stated). 
 
 The increase in the marketing stations is 
 shown by Defendant's Exhibits 263 and 264 
 (Vol. 19). A marketing station consists of tanks 
 for the storage of oil, with tank wagons for the 
 distribution of the oil to retailers. Exhibits 263 
 shows that in 1888 there were 313 such stations 
 and their location. Exhibit 264 shows that in 
 1906 there were 3,573, and their location. 
 
 The efforts of the company have been 
 unceasing in the development of the markets 
 of the world. As Mr. Archbold testified (Vol. 19, 
 p. 3290) 
 
 " Our trade is pretty nearly world- wide. 
 There is scarcely a civilized part of the 
 globe that the Standard Oil Co. does not 
 reach in one way or another with American 
 oil. Q. And has it been a slow building-up 
 process? A. It has been a process since 
 the organization began. The effort began 
 at once with the expansion of trade. The 
 
83 
 
 effort of the Standard Oil Co. from its very 
 inception has been the development of the 
 resources of this country and the extension 
 of its commerce throughout the world. Q. 
 In the Orient and in Europe is it your en- 
 deavor to reach the consumer direct in the 
 same way you do here ? A. It is. We are 
 as rapidly as possible putting the same plan 
 of distribution into operation in all those 
 countries that we have here, so as to, with 
 the greatest possible economy, reach the 
 
 consumer." 
 
 Defendant's Exhibit 276, Vol. 19, p. 660, 
 shows the relative volumes of the Standard's 
 export and domestic trade in illuminating oil, as 
 follows : 
 
84 
 Year. Exports. Domestic. 
 
 1891 57- x Per Cent. 42.90 Per Cent. 
 
 1892 57.28 " 42.72 " 
 
 1893 61.72 " 38-28 
 
 1894 62.44 " 37-56 
 
 1895 -60.15 39.85 
 
 1896 63.61 " 36.39 
 
 1897 64.25 " 35-75 
 
 1898 62.17 " 37-83 
 
 1899 60.21 " 39-79 
 
 1900 ,...61.84 " 38.16 
 
 1901 63.39 36.61 
 
 1902 59'9 2 " 40.08 
 
 1903 55-37 " 44.63 
 
 1904 60.14 " 39.56 
 
 1905 62.86 " 37.14 " 
 
 1906 63.00 " 37-00 
 
 The development of the business is remark- 
 ably illustrated by the table on page 525, 
 Volume III, .of the Brief on the Facts, 
 which shows the attention that has been con- 
 tinuously given to the utilization of the 
 by-products of the Standard refineries, their 
 manufacture into useful articles, and the creation 
 
85 
 
 and expansion of the demand for them. The 
 table is as follows : 
 
 CRUDE OIL CONSUMED CRUDE OIL YIELD, 
 AND THE DIVISIONS AS BETWEEN RE- 
 FINED OIL AND ALL OTHER PRODUCTS 
 BY S. O. Co. REFINERIES. 
 
 Year 
 
 Total 
 Crude Oil 
 Consumed 
 (Gallons) 
 
 Total Yield 
 all products 
 (Gallons) 
 
 Total 
 Refined Oil 
 (Gallons) 
 
 i895 
 
 I9OO 
 1904 
 1906 
 
 WtASiPSG 
 
 ^872, 159,702 
 
 2,345,797, J 46 
 2,728,248,642 
 
 1,630,234,365 
 1,774,807,397 
 2,207,629,694 
 
 2,57^919,995 
 
 990,084,070 
 1,098,236,795.5 
 1,112,495,658 
 1,209,441,341 
 
 
 Percentage 
 
 Total By- 
 
 Percentage 
 
 Year 
 
 Refined Oil 
 
 Products 
 
 By-Products 
 
 
 Of Total 
 
 (Gallons) 
 
 of Total 
 
 1895 
 
 60.73 
 
 640,150,295 
 
 39-27 
 
 I9OO 
 
 61.88 
 
 676,570,601.5 
 
 38.12 
 
 1904 
 
 50-39 
 
 *,095, 134,036 
 
 49.61 
 
 1906 
 
 47.02 
 
 1,362,478,654 
 
 52.98 
 
86 
 
 Refined Oil. 
 Inc. over 1895 
 Per 
 Year Gallons Cent. 
 
 By-Products. 
 Inc. over 1895 
 
 Per 
 Gallons Cent. 
 
 1900 108,152,725.5 10.92 
 
 36,420,306.5 5.69 
 
 1904 122,411,588 12.36454,983,741 71.07 
 
 1906 219,357,271 22.14 
 
 722,328,359 112.84 
 
 Thus the total amount of illuminating oil for 
 foreign and domestic trade had come to be in the 
 year 1906 less than one-half of the total product 
 of the Standard refineries, the remainder con- 
 sisting of the by-products enumerated by Mr. 
 Archbold (Vol. 17, p. 3255). 
 
 In the same brief it is shown that in the 
 year 1906 bulk for bulk the illuminating oil 
 sold in the United States by the Standard 
 concerns formed only 17.39%, or about one- 
 sixth, of the total products of the refineries, and 
 yet the brunt of the charge against it is that it 
 is a monopoly by virtue of its control of the 
 illuminating oil trade (Brief on the Facts, Vol. 
 
 m, p. 528). 
 
 The same brief (pp. 530, 531), shows that the 
 largest estimate of the profits earned on the de- 
 
87 
 
 fendants' domestic trade in illuminating oil in 
 1906 was from $14,000,000 to about $18,000,000. 
 If it should be objected that it does not appear 
 that the profits on the foreign and domestic trade 
 were on an equality attention is called to the 
 following figures which show that the average 
 export prices have been uniformly higher than 
 the average domestic refinery prices for the same 
 kind of oil. 
 
 Pet. Ex. 1041 Def. Ex. 293-3, Aver- 
 
 Year. Export W. W. age Refinery Prices 
 
 Prices. W. W. Oil. 
 
 1895 5.84 5.24 
 
 ^96 5-77 4-93 
 
 1897 4-68 4.02 
 
 1898 4.97 4.26 
 
 1899 6.29 5.25 
 
 1900 6.96 5.44 
 
 1901 5.60 4.96 
 T 9Q2 5.71 5.45 
 
 1903 7-39 6.85 
 
 1904 6.81 6.76 
 
 1905 5.68 5.42 
 
 1906 6.14 5.38 
 
 The foreign companies, to whose profits refer- 
 ence was made on the oral argument, are mar- 
 
88 
 
 keting companies only ; so that the fact that they 
 have apparently made a lower percentage of 
 profits than the domestic companies has no sig- 
 nificance. Most of the domestic companies, espe- 
 cially those whose profits have been largest, are 
 both refining and marketing companies. Natur- 
 ally their profits would be very much larger 
 than those of mere marketing companies. The 
 comparison between export prices, which include 
 the refining profit, and the average domestic re- 
 finery prices, is the proper test, and it establishes 
 an approximate equality between the export and 
 domestic trade in refined oil as to profits. 
 
 (6) There have always been numerous refineries 
 in this country, owned by other parties, engaged 
 in the production and sale of oil here and in for- 
 eign countries. In the report of the Commissioner 
 of Corporations concerning the oil industry, dated 
 May 2nd, 1906, there is given (on page 59) a list 
 of 65 so-called independent refineries which is 
 headed " Principal Independent Refineries in 
 the United States by States, 1904." That 
 list shows refineries at various points in Pennsyl- 
 vania, New York, New Jersey, Ohio, Kansas, 
 Texas and California. In a foot note on page 
 58 the Commissioner adds six others, which 
 
" began operations in 1905 and 1906 in the 
 Kansas territory." Referring to the oil regions 
 in Pennsylvania he states (R., p. 84) that 
 " there are two independent refineries at Brad- 
 ford, ten at Warren, Struthers and Clarendon, 
 three at Titusville, three at Coraopolis, six at 
 Oil City, and others at scattered locations, making 
 altogether more than thirty such establishments 
 in this vicinity." 
 
 Mr. Emery, in his testimony in this case, 
 named 52 independent refineries as active works, 
 and among them such important concerns as 
 the Pure Oil Co. with its refinery at Marcus 
 Hook, Pa., the National Refining Co. with re- 
 fineries at Cleveland and other points, the Gulf 
 Refining Co., and the Texas Co. His list with 
 two or three exceptions is confined to Ohio and 
 east of Ohio. 
 
 The witnesses Westgate and Boltz in their 
 testimony named 36 refineries which have formed 
 an association known as the National Petroleum 
 Association for the advancement of their interests 
 (Vol. 6, p. 2926 ; Vol. 5, p. 2054). 
 
 Defendants' Exhibit 277 (Vol. 19, pp. 662 and 
 663) gives a list of 123 competitive refineries. 
 
90 
 
 This subject is exhaustively treated in the 
 Brief on the Facts, Vol. L, p. 231. 
 
 In the report of the Commissioner of Corpora- 
 tions on the oil industry of August 5th, 1907, 
 it is said at page 651 : 
 
 " The largest independent concern in 
 1904 scarcely produced more than 200,000 
 barrels of illuminating oil. Since that time, 
 however, two or three independent concerns 
 have enlarged their refineries or built new 
 ones which approach more nearly to the 
 size of the Standard plants. Thus, the 
 plant of the Pure Oil Co. at Philadelphia 
 has a capacity of about 700,000 barrels (of 
 42 gallons) of crude per year, and can pro- 
 duce on the basis of the prevailing yield 
 from Pennsylvania crude between 300,000 
 and 400,000 barrels (of 50 gallons) of illumi- 
 nating oil per year. The Gulf Refining 
 Co.'s plant at Port Arthur, Tex. has a crude 
 capacity of more than 4,000,000 barrels per 
 year. This is by far the largest independ- 
 ent refinery now in operation, but on account 
 of the small proportion of illuminating oil 
 obtained from Texas crude its output of that 
 product is much less than that of many of 
 the Standard plants, probably in the neigh- 
 borhood of 500,000 barrels per year. A 
 new independent concern in California, the 
 California Petroleum Refineries, Ltd., has a 
 plant nearing completion which will have 
 
91 
 
 a capacity of about 2,500,000 barrels of 
 crude per year, which is not very much less 
 than the capacity of the Standard's Cali- 
 fornia plant, which in 1904 handled about 
 3,017,000 barrels." 
 
 And on pages 636 and 637 : 
 
 " Many independent concerns have gone 
 a good way in the direction of integration. 
 Thus many of the small refiners of West- 
 ern Pennsylvania and Ohio are interested 
 in crude-oil production, and supply part of 
 the oil which they refine. A considerable 
 number of them have small pipe lines or 
 are part owners of pipe lines for supplying 
 their refineries with crude. A large pro- 
 portion of them have facilities for selling 
 their products directly to retail deal- 
 ers or are interested in market- 
 ing concerns which have such facilities. 
 The great majority of the refiners, it is 
 true, have not carried integration nearly so 
 so far as the Standard. But some of them, 
 such as the Pure Oil Co., the Gulf Refining 
 Co. (in conjunction with the J. M. Guffey 
 Petroleum Co., which is owned by the 
 same interests), the National Refining Co. 
 of Cleveland, and the Union Oil Co. of 
 California, have developed the system of 
 integration to a degree approaching that of 
 the Standard itself. All of these concerns 
 have pipe lines, refineries and local market- 
 ing facilities. All of them carry the 
 
92 
 
 elaboration of by-products to substantially 
 the most complete point permitted by the 
 character of the crude which they use. All 
 except the National Refining Co. are large 
 producers of crude oil. All of them own 
 tank cars and all, except the National 
 Refining Co., own tank vessels. Probably 
 none of these concerns manufactures the 
 accessory materials of refining, packages, 
 etc., to any such extent as the Standard does, 
 but otherwise their system of integration 
 is nearly as complete as that of the 
 Standard. The difference between them 
 and the Standard is rather in the volume 
 of business than in its comprehensiveness." 
 
 The testimony shows that these concerns are 
 as a rule prosperous and growing. As an illus- 
 tration of that fact, Petitioner's Exhibit 371, Vol. 
 8, Page 899, shows that the crude oil receipts of 
 the Producers' and Refiners' Oil Co., associated 
 with the Pure Oil Co., increased from 1,321,572 
 barrels in 1900 to 2,771,384 barrels in 1906 ; that 
 the crude oil delivered by the United States Pipe 
 Line Co., associated with the Pure Oil Co., to the 
 refinery of the latter Company at Marcus Hook 
 which began operations in 1904 increased from 
 223,000 barrels in that year to 733,000 barrels 
 in 1906 ; and that the refined oil delivered by 
 the United States Pipe Line Co. from interior 
 
93 
 
 refineries to Marcus Hook increased from 400,- 
 ooo barrels in 1901 to 800,000 barrels in 1906. 
 Mr. Tarbell, who is connected with those Com- 
 panies, testified that their business had been 
 u a growing, developing and expanding busi- 
 ness " (Vol. 3, p. 1451), and further as follows 
 (Idem, p. 1460) : 
 
 " Q. Mr. Tarbell, for a number of years you 
 have lived alongside of the Standard Oil Co., 
 have you not, in many different localities in 
 the transaction of your business? A. We 
 are in a number of points where they are 
 doing business; yes, sir. Q. At many 
 points? A. Yes, sir. Q. In Europe and 
 in this country ? A. Yes, sir. Q. And your 
 business is growing? A. Yes, sir. Q. And 
 you have made money ? A. Yes, sir. Q. 
 And you are a prosperous concern? A. 
 Well, I think we are. Q. And you are ex- 
 panding and developing the whole time? 
 A. It is necessary to do so if we stay in the 
 oil business. 
 
 These conditions are utterly inconsistent with 
 the theory of a monopoly. They demonstrate 
 that the field is not only open to competitors, 
 but is occupied by them. The extent to which 
 they participate in it is measured only by their 
 efforts and capital. It is true that the Standard 
 
94 
 
 Has done a large percentage of the business, but 
 that is because of its long life, its comprehensive 
 efforts, its energy, and the capital it has 
 employed and risked. That percentage has 
 been, however, continually decreasing in later 
 years as others have engaged in the business 
 on a larger and more comprehensive scale. What 
 is true of to-day was equally applicable to past 
 times if the same efforts and capital had been 
 employed, and the same intelligence shown in 
 adapting those efforts to modern conditions. 
 The percentage of the total business done by the 
 Standard will doubtless continue to decrease, and 
 the causes of that decrease had just the same 
 opportunity of operation in the past as in the 
 present. The volume of the business which 
 any concern obtains for itself is de- 
 pendent upon its activities and means. 
 That is true now, and always has been 
 true. It is true of the volume of busi- 
 ness that has been done by the Standard and 
 by its competitors. It was the most intelli- 
 gent, the most active, the best equipped, and in 
 the highest credit, and the greatest share of the 
 business fell to it. But that is not monopoly, 
 and that it is not so is demonstrated by the fact 
 
95 
 
 that as others have approached it in efficiency, 
 capacity and means they have shared in the 
 business correspondingly, and are constantly 
 sharing in it to a greater and greater extent. 
 
 (7) To show the volume of the Standard's 
 business is the object of Petitioner's Exhibits 
 376, 377 and 378 (Vol. 8, Page 904). Exhibit 
 376 shows that the runs from the Standard, 
 Tide- Water and Manhattan pipe lines, compared 
 with the total production of crude oil in the 
 Pennsylvania field, were in the year 1900, 92.9 
 per cent.; in 1901, 92.9 per cent.; in 1902, 90.7 
 per cent.; in 1903, 89.5 per cent.; in 1904, 88.7 
 per cent; in 1905, 87.3 per cent., and in 1906, 
 83.2 per cent., which is a decrease of nearly 10 
 per cent, in seven years ; and that the percentages 
 with respect to the Lima-Indiana field were in 1900, 
 92.9 per cent.; in 1901, 93.0 per cent.; in 1902, 
 92.5 per cent.; in 1903, 92.4 per cent; in 1904, 
 93.5 per cent; in 1905, 92.9 per cent., and in 
 1906, 89.6 per cent. It is to be observed as to 
 the Lima-Indiana field that it has been largely 
 left to the Standard for the reason that its pro- 
 duction, excepting to a small extent, is not refin- 
 able by the ordinary processes ; and that the 
 Standard at great expense developed and patented 
 a successful process for its utilization. 
 
96 
 
 Exhibit 378 shows that the proportions of the 
 total pipe line deliveries to the Atlantic sea-board 
 of the Standard and Tide- Water Pipe Lines from 
 1900 to the year 1906, were as follows : 
 
 Year. 
 
 IQOO . 
 
 Per cent. 
 
 ..Q7. 1 
 
 Year. 
 
 IQO4 . 
 
 Per cent. 
 
 CK.7 
 
 IQOI . 
 
 y/ 
 
 Q7.^ 
 
 IQCK 
 
 vo*/ 
 
 CK ^ 
 
 I9O2 
 
 966 
 
 J -y v -'j . . 
 1906 
 
 ;7 DO 
 
 QZ I 
 
 IQOI.. 
 
 ...Q6.0 
 
 
 
 These figures simply show that during the 
 years they cover the Standard and Tide-Water 
 Companies refined 95 per cent, of the crude oil 
 refined at the Atlantic sea-board if the amount 
 of crude exported and the amount reaching the 
 seaboard by railroad be disregarded. There was 
 no reason why others should not have refined at 
 the sea-board as the Pure Oil Company does. 
 
 Exhibit 377 shows during the same years the 
 proportion of the exports of illuminating oil by the 
 Standard compared with the total exports, as 
 follows : 
 
 Year. 
 
 TOOO 
 
 Per cent. 
 90 8 
 
 Year. 
 1004.. 
 
 Per cent. 
 ..86.9 
 
 TOOT 
 
 QO. ^ 
 
 IQOS-. 
 
 ;7 
 ..87.9 
 
 TOO2 
 
 80.1 
 
 IQO6 
 
 ..86.3 
 
 IQOl.. 
 
 ^y'O 
 
 ...86.2 
 
 -7 
 
 
97 
 
 Here again we have a decreasing proportion. 
 
 The nse of naphtha or gasoline has greatly 
 increased during the last ten years, so that, as 
 appears from the statistics of 1904, it was a little 
 over one-half of the quantity of illuminating oil 
 that was marketed. It is a more valuable pro- 
 duct than illuminating oil as it brings a much 
 higher price. This trade is another instance of 
 the increase in the volume of the business of 
 competitors during recent years as it has grown 
 from eight per cent, of the whole in 1897 to J 3 
 per cent, in 1906. (Brief on Facts, Vol. III., p. 
 
 535)- 
 
 Another instance of the same kind is furnished 
 
 by Defendant's Exhibit 108 (Vol. 18, p. 274), 
 which shows the number of tank cars in use in 
 this country in the transportation of petroleum 
 and its products on the first day of January of 
 each year of the years 1899, 1905 and 1908, by 
 the Union Tank Line Company and the Waters- 
 Pierce Oil Co. (Standard Companies), and by 
 other companies and railroads. It appears that 
 in 1899 the Standard's cars were 62 per cent, of 
 the whole; in 1905 they had decreased to 52 per 
 cent. ; and in 1908 they had further decreased to 
 51 per cent. ; whilst during the same period the 
 
98 
 
 tank cars of other companies, including those 
 owned by the railroads which are used by them, 
 had increased from 38 per cent, of the whole to 
 49 per cent. To express the matter in another 
 way the Standard's tank cars between 1899 an( ^ 
 1908 had increased 171 per cent., whilst those in 
 use by others had increased 263 per cent. ; or 
 the tank cars used by the Standard Companies 
 in 1899 were 60 per cent, more than those in use 
 by others while in 1908 they were only four per 
 cent. (Brief on Facts, Vol. II., p. 251). 
 
 But whatever may be the volume of the 
 Standard's business it is due to the size 
 and capacity of its refineries, their geo- 
 graphical distribution, and the marketing 
 facilities that it has provided in every sec- 
 tion of this country and throughout the world. 
 It is not due to any restriction of the employ- 
 ment of the energies and capital of others in 
 the business, or to any system of exclusive 
 selling to the trade. There is no evidence that 
 the dealers in oil have ever been required to buy 
 exclusively from the Standard, or been placed 
 under any restrictive contracts or arrange- 
 ments respecting the source of their supply. 
 There has been no effort at any time to control 
 
99 
 
 the market by any such means. That formid- 
 able weapon has never been used to secure an 
 advantage over competitors, and had the Stand- 
 ard men ever been engaged in a conspiracy to 
 " crush " competition by excluding competitors 
 from the trade it would have been used because 
 of its potency. 
 
 It is claimed that the extent of the Standard's 
 pipe line system has conduced to a monopolistic 
 control of the business. That charge we have al- 
 ready answered. Its pipe line systems have been 
 extended from time to time as new oil fields were 
 discovered to meet its own needs and provide its 
 refineries with a regular and adequate supply of 
 crude oil. It was a necessary step, and as legi- 
 timate as it was necessary. Wherever these lines 
 could be private lines that was and is their char- 
 acter, because they were built for its own pur- 
 poses. For instance, when the mid-continent 
 field showed promise of great development the 
 Prairie Oil and Gas Co., organized by the 
 Standard, by an expenditure of many mil- 
 lions of dollars built its own private line 
 to reach those fields and acquire the oil for 
 the Standard's refineries. The production of 
 those fields has far exceeded the consumption, but 
 
100 
 
 tankage has been provided at a cost of many 
 more millions that the producers might have an 
 immediate cash market for their oil. But the 
 United States Pipe Line Company, controlled by 
 the Pure Oil Co. , also has its pipe line to the 
 Atlantic sea-board, and has extended its trunk 
 line and its gathering systems into Ohio, and 
 West Virginia to reach the oil in those fields. 
 The Texas and Gulf Co.s have their pipe lines 
 running from the mid-continent field to the Gulf. 
 What those Companies did, and have done, 
 others could equally well have done wherever 
 oil is produced by finding capital and putting it 
 to that use. 
 
 In the States where it was necessary by local 
 laws or for other reasons that the pipe lines 
 should be common carriers the relation of any one 
 desiring transportation has been the same as the 
 relation of shippers to any other common carrier. 
 They could demand reasonable rates and enjoin 
 unreasonable rates. Since July, 1906, they have 
 been able, under the Interstate Commerce Act, 
 to apply to the Interstate Commerce Commission 
 to fix the rates of any of the common carrier lines 
 engaged in interstate transportation, but no one 
 has done so. 
 
101 
 
 The claim that the ownership of the pipe 
 line systems has been used coercively with a 
 monopolistic effect is without any foundation. 
 The fact is that from an early day pipe lines 
 have been, as they now are, an absolutely neces- 
 sary adjunct to the refining business on a large 
 scale, and they have been provided by the Stand- 
 ard to meet its own needs for a sure, regular 
 and adequate supply of oil for its refineries, and 
 not as a weapon of coercion or control. 
 
 (8) It is further charged that the volume of 
 the Standard's business has been due to rail- 
 road rebates, particular contracts in restraint of 
 trade, and unfair competitive practices. Those 
 subjects are dealt with at length in the Brief on 
 the Facts. 
 
 (9) It is also charged that the course of 
 prices furnishes evidence tending to show a 
 monopoly. That charge is effectively answered 
 in the Brief on the Facts (Vol. 3, pp. 539 et seq.} 
 where it is shown that during the period under 
 examination the Standard's prices rose less than 
 the average rise in general comodities, and that, 
 measured by the purchasing value of money, 
 they did not practically rise at all. Moreover 
 the constant fluctuation in the prices from year 
 
102 
 
 to year is the strongest evidence that they were 
 governed by economic conditions and not fixed by 
 arbitrary will. It is to be borne in mind that 
 there may be a natural and legitimate influence 
 or power over prices due to the magnitude 
 of a business, and that inferences may not 
 be drawn from prices in favor of monopoly 
 when the other evidence shows that the magni- 
 tude of the business is due to legitimate acquisi- 
 tion, growth and development, and not to the 
 exclusion of others from the business by re- 
 strictive contracts or unlawful or coercive methods. 
 Obviously the controlling and fundamental mat- 
 ter is whether that magnitude is a growth and 
 development along lawful and legitimate lines : 
 because if it is so the course of prices is quite 
 immaterial. 
 
 (10) What has been said about the course of 
 prices covers the charge that the profits of the 
 Company have been excessive. In the first place 
 the profits have not been excessive considering 
 the nature and hazards of the business ; and in 
 the next place if the evidence, apart from profits, 
 fails to show that the magnitude of the business 
 is monopolistic the fact of unusual profits, if it 
 existed, does not convert it into a monopoly. 
 
103 
 
 These summaries are not exhaustive, and do 
 not pretend to be more than a fair statement of 
 the more material facts bearing on the subjects 
 they cover. 
 
 POINTS. 
 
 (1) The common ownership of the Stand- 
 ard properties was not an illegal combina- 
 tion or conspiracy at the time the Act of 
 1890 went into effect. 
 
 (2) The Act of 1890 did not by its terms 
 or reasonable construction convert that 
 common ownership into an illegal and 
 criminal combination in restraint of trade. 
 
 (3) Congress could not constitutionally 
 convert the ownership of the properties 
 and the use to which they were put into an 
 illegal and criminal combination or con- 
 spiracy. 
 
 (4) Even if the acquisitions of the Stand- 
 ard properties and their common owner- 
 ship had occurred since the Act of 1890 
 went into effect they would not constitute 
 an illegal and criminal combination or 
 conspiracy within the Act. 
 
104 
 
 (5) The acquisition by the Standard Oil 
 Co. (of New Jersey) from the common 
 owners of their shares in the so-called sub- 
 sidiary companies was not an illegal and 
 criminal contract, combination or con- 
 spiracy within the Act of 1890. 
 
 (6) There is no monopolization or at- 
 tempt to monopolize. 
 
 (7) The only relief, if any, that can be 
 granted is to enjoin specific acts, contracts, 
 or methods in restraint of interstate trade 
 or tending to its monopolization if any 
 such are found to exist. 
 
 (8) There is no basis in the proofs for a 
 degree affecting the international trade of 
 the Defendants. 
 
 (9) There is no basis in the proofs for a 
 decree severing the ownership of the stocks 
 of the pipe line companies. 
 
 (10) There is no basis in the proofs for a 
 decree affecting the Defendants engaged 
 in the natural gas business, or the owner- 
 ship of their stocks by the Standard Oil Co. 
 (of New Jersey). 
 
105 
 
 POINT I. 
 
 The common ownership of the Standard 
 properties was not an illegal combination 
 or conspiracy at the time the Act of 1890 
 went into effect. 
 
 (i) The right freely to buy and sell property 
 is a fundamental civil right and a part of the 
 liberty of the individual guarded and protected 
 by the constitutional guaranties, both national 
 and state. It is indispensable to the existence 
 and progress of civilization. The utmost free- 
 dom in its exercise as an element of the 
 broader principle of liberty of contract is inher- 
 ent in our social and industrial system. It has 
 never been limited by any policy of encouraging 
 or protecting competition. There has never been 
 one rule with respect to its exercise for competi- 
 tors in business and another for non-competitors. 
 No such classification is recognized by the com- 
 mon law. The right to buy from or sell to a 
 competitor is no different from the right to buy 
 from or sell to a non-competitor. The common 
 law furnishes no precedent placing any restric- 
 tion upon the right of competitors to buy from 
 and sell to each other their businesses and plants. 
 
106 
 
 As recently as Cincinnati Packet Co. vs. Bay 
 (200 U. S., 179) the validity of a sale was recog- 
 nized though, as the Court said, " All there was 
 to sell besides certain instruments of competition 
 was the competition itself." 
 
 In Trenton Potteries Co. vs. Oliphant, 58 N. 
 J. Eq. 507,524, combinations by independent and 
 unconnected traders to regulate prices or pro- 
 duction are distinguished from purchases of the 
 businesses of competitors, and in regard to the 
 latter the Court said : 
 
 " A person engaged in any manufacture 
 or trade, having the right to acquire and 
 possess property, and to do with it what 
 he chooses, may lawfully buy the business 
 of any of his competitors. His first pur- 
 chase would at once diminish competition. If 
 he continued to purchase, each succeeding 
 transaction would remove another competi- 
 tor. If his capital was large enough to en- 
 able him to buy the business of all compet- 
 itors, the last purchase would completely 
 exclude competition, at least for a time. 
 But in the absence of legislative restrictions 
 (if such could be imposed) upon the acqui- 
 sition of such property and its use when so 
 acquired, courts could impose no limitation. 
 They would be obliged to enforce such con- 
 tracts, notwithstanding the effect was to 
 diminish or even to exclude competition. 
 
107 
 
 But appellant is a corporation and not an 
 individual. Corporations, however, may 
 lawfully do any acts within the corporate 
 powers conferred on them by legislative 
 grant. Under our liberal corporation laws, 
 corporate authority may be acquired by ag- 
 gregations of individuals organized as pre- 
 scribed to engage in and carry on almost 
 every conceivable manufacture or trade. 
 Such corporations are empowered to pur- 
 chase, hold, and use property appropriate 
 to their business. They may also pur- 
 chase and hold the stock of other corpora- 
 tions. Under such powers it is obvious 
 that a corporation may purchase the plant 
 and business of competing individuals and 
 concerns. The legislature might have with- 
 held such powers or imposed limitations 
 upon their use. In the absence of prohi- 
 bition or limitation on their powers in this 
 respect, it is impossible for the courts to 
 pronounce acts done under legislative grant 
 to be inimical to public policy. The grant 
 of the legislature authorizing and permitting 
 such acts must fix for the courts the char- 
 acter and limit of public policy in this re- 
 gard. It follows that a corporation em- 
 powered to carry on a particular business 
 may lawfully purchase the plant and busi- 
 ness of competitors, although such purchases 
 may diminish or, for a time at least, destroy 
 competition. Contracts for such purchases 
 cannot be refused enforcement." 
 
108 
 
 In Diamond Match Co. vs. Roeber, 106 N. Y., 
 483, it was said: 
 
 " We are not aware of any rule of law 
 which makes the motive of the covenantee 
 the test of the validity of such a contract. 
 On the contrary, we suppose a party may 
 legally purchase the trade and business of 
 another for the very purpose of preventing 
 competition, and the validity of the contract, 
 if supported by a consideration, will depend 
 upon its reasonableness as between the par- 
 ties. Combinations between producers to 
 limit production and to enhance prices, are 
 or may be unlawful, but they stand on a 
 different footing." 
 
 See, also, 
 
 In re Greene, 52 Fed., 104. 
 
 In re Corning, 51 Fed., 210, 211. 
 
 (2) The common law doctrine respecting con- 
 tracts and combinations in restraint of trade does 
 not circumscribe the right to buy and sell ; it 
 concerns only executory contracts or arrange- 
 ments restricting the liberty of individuals in 
 the pursuit or conduct of their businesses. 
 Its underlying conception was that such re- 
 strictions could be carried to the point of 
 contravening a sound public policy with respect 
 to the freedom of the individual to employ 
 
109 
 
 his energy and capital in trade, and the freedom 
 of trade. It has no concern with compulsory 
 competition or the right of the individual to re- 
 tire from a trade in which he is engaged and 
 sell the business and the property employed in 
 it to a competitor. It leaves competitors free 
 to form partnerships and thereby combine their 
 energies, resources and capital. It leaves them 
 free to form corporations and unite their 
 energies, resources and capital in that mode of 
 organization. It does not deny to the competitor 
 who wishes to retire from business, or who from 
 lack of ability, ingenuity or enterprise, is fall- 
 ing behind in the competitive race, or who for 
 any other reason wishes to sell, the only market 
 for his business by prohibiting him from selling 
 it to those engaged in the same business. It has 
 never sought to place a limit on the expansion 
 of the business of the individual or the corpora- 
 tion either by employing additional capital in 
 enlarging existing plants, or building new ones, 
 or by acquiring existing plants from others. In 
 leaving free the right to buy and sell the common 
 law merely expresses the faith and belief 
 of men and society in the free play of individual 
 
110 
 
 effort and the supreme necessity of the right to 
 industrial progress. 
 
 " The truth is," said Lord Justice BOWEN 
 in the Mogul Steamship Case, L. R., 23 
 Q. B., 617, " that the combination of capital 
 for purposes of trade and competition, is a 
 very different thing from such a combina- 
 tion of several persons against one, with a 
 view to harm him, as falls under the head of 
 an indictable conspiracy. There is no just 
 cause or excuse in the latter class of cases. 
 There is such a just cause or excuse in the 
 former. There are cases in which the very 
 fact of a combination is evidence of a design 
 to do that which is hurtful, without just 
 cause, is evidence to use a technical ex- 
 pression of malice. But it is perfectly 
 legitimate, as it seems to me, to 
 combine capital for all the mere purposes 
 of trade for which capital may, apart from 
 combination, be legitimately used in trade. 
 To limit combinations of capital, when used 
 for purposes of competition, in the manner 
 proposed by the argument of the plaintiffs, 
 would, in the present day, be impossible 
 would be only another method of attempting 
 to set boundaries to the tides." 
 
 (3) The scope and limits of the common 
 law doctrine are clearly shown and fixed by 
 the cases habitually cited. These cases 
 have been frequently analyzed by the courts, 
 
Ill 
 
 particularly in the opinions of HARLAN, J., in 
 U. S. vs. E. C. Knight Co. (156 U. S., p. 25 
 et seg.) and in Northern Securities Co. vs. U. S. 
 (193 U. S., pp. 339-342) ; and in the opinion of 
 TAFT, J., in U. S. vs. Addystone Pipe and Steel 
 Co. (84 Fed., pp. 288-292). 
 
 The leading cases are Hilton vs. Eckersley (6 
 El. & BL, 47) in England ; and in this country 
 Morris Run Coal Co. vs. Barclay Coal Co. (68 
 Pa. St., 173) ; Salt Co. vs. Guthrie (35 Ohio St., 
 666) ; Arnot vs. Pittston & Elmira Coal Co. (68 
 N. Y., 558); Craft vs. McConoughy (79 111., 346) ; 
 India Bagging Association vs. Kock (14 La. 
 Ann., 1 68) ; Vulcan Powder Co. vs. Hercules 
 Powder Co. (96 Cal., 510) ; Oil Co. vs. Adoue (83 
 Tex., 650) ; and Chapin vs. Brown (83 Iowa, 156). 
 Many other cases might be cited, but these are 
 typical of them all, and a reference to them will 
 sufficiently indicate the nature of the combina- 
 tions which have been held to be in restraint of 
 trade or contrary to public policy and show that 
 they do not include purchases of competitive 
 properties. 
 
 Hilton vs. Eckersley (6 El. & Bl., 47) was 
 brought upon a bond signed by eighteen Lanca- 
 shire cotton spinners binding them severally to 
 
112 
 
 carry on their businesses with respect to the 
 wages they would pay, hours of labor and other 
 matters, according to the regulations of the 
 majority. The Court of Exchequer Chamber 
 held that the bond was void, because in restraint 
 of trade, for the reason that " each man's power 
 of carrying on his trade according to his discre- 
 tion for his own best advantage " was restrained. 
 (See Stephens' History of the Criminal Law of 
 England, pp. 219, 220). 
 
 Morris Run Coal Co. vs. Barclay Coal Co. (68 
 Pa. St., 173), was an agreement between five in- 
 dependent coal companies, controlling the pro- 
 duction of the Blossburg and Barclay mining 
 regions in Pennsylvania, empowering a com- 
 mittee to fix prices and each company's propor- 
 tion of sales. 
 
 Arnot vs. Pittston and Elmira Coal Co. (68 
 N. Y., 558), was an agreement between two in- 
 dependent coal companies whereby one of them, 
 which had a coal depot at Elmira which was the 
 chief market for coal in western New York, pur- 
 chased a portion of the product of the other and 
 bound it not to sell coal to any other party to 
 come north of the state line between New York 
 State and Pennsylvania. It also appeared that 
 
113 
 
 the purchasing company had similar contracts 
 with all the other mining proprietors in the same 
 coal region. 
 
 Salt Co. vs. Guthrie (35 Ohio St., 666), in- 
 volved an agreement between independent manu- 
 facturers in a salt producing territory in Ohio 
 providing for a committee to fix the prices at 
 which all of them should sell their product. 
 
 Craft vs. McConoughy (79 111., 346), in- 
 volved an agreement between five independent 
 grain dealers in Rochelle, Illinois, to conduct 
 their business as if independent of each other, 
 but fixing the prices at which they would sell 
 and dividing the profits of the business as a 
 whole between them in fixed proportions. 
 
 India Bagging Association vs. Kock (14 La. 
 Ann., 1 68) was based on an agreement between 
 eight independent commercial firms in New 
 Orleans which held a large quantity of cotton 
 bagging providing that no member should sell 
 for three months excepting by vote of the 
 majority. 
 
 Vulcan Powder Co. vs. Hercules Powder 
 Co. (96 Cal., 510) involved an agreement 
 between four independent powder companies 
 of California providing that each should sell at 
 
114 
 
 prices to be fixed by a committee of their repre- 
 sentatives, and pay over to the others the profits 
 on any excess of sales over a fixed proportion of 
 the total sales. 
 
 Oil Co. vs. Adoue (83 Tex., 650) was based on 
 an agreement between five independent owners 
 of cottonseed oil mills in Texas that they 
 would not sell at less than certain agreed prices, 
 and whereby one of them guaranteed to the other 
 four profits to a stated amount. 
 
 Chapin vs. Brown (83 la., 156) involved an 
 agreement between the grocery men in a town 
 not to buy or sell any butter so as to throw the 
 business into the hands of one man who dealt 
 exclusively in butter. 
 
 There are other cases concerning agreements 
 between independent companies or parties en- 
 gaged in a quasi-public employment fixing prices 
 and dividing or pooling the business. (Gibbs vs. 
 Gas Co., 130 U. S., 396; Hooker vs. Vande- 
 water, 4 Denio, 349 ; Stan ton vs. Allen, 5 Denio, 
 434 ; West Va. Transportation Co. vs. Ohio 
 River Pipe Line Co., 22 W. Va., 600.) 
 
 These cases sufficiently illustrate the doctrine 
 of the common law although in some of them 
 there was a local statute denouncing con- 
 
115 
 
 spiracies " to commit any act injurious to trade 
 or commerce." In each case there was a com- 
 bination of independent competitive manufac- 
 turers or dealers in the form of an executory 
 agreement regulating prices, production, or the 
 conduct of the business of each in other particu- 
 lars. The essence of such combinations is that 
 the parties to it are independent competitive 
 manufacturers or dealers, and that restraint 
 is placed upon the freedom of each to conduct 
 his own business with respect only to his own 
 interests and judgment. Unless these essential 
 elements appear the doctrine of these cases 
 has no application. Purchases of property, 
 though affecting competition in uniting prop- 
 erties employed in the same business which 
 had been previously separately owned, were not 
 involved, and are neither within the letter or the 
 spirit of the principle of these cases. 
 
 (4) It is not necessary to analyze the rule of 
 public policy on which these cases are 
 based. " Public policy," said Lord BROUGHAM, 
 in Egerton vs. Brownlow (4 H. L. Cas., 196) " is 
 that principle of the law which holds that no 
 subject can lawfully do that which has a tend- 
 ency to be injurious to the public or against the 
 
116 
 
 public good.' ' " If," said Sir GEORGE JESSEL, in 
 Printing Co. vs. Sampson (19 L. R. Eq. Cas., 462) 
 " there is one thing more than any other which 
 public policy requires, it is that men of full 
 age and competent understanding shall have 
 the utmost liberty of contracting, and that con- 
 tracts, when entered into freely and voluntarily, 
 shall be held good and shall be enforced by 
 Courts of Justice ". Whenever contracts or 
 transactions are questioned as injurious to the 
 public there is a balancing of the considerations 
 bearing on liberty of contract on the one hand 
 and on the public good on the other, out of which 
 have grown certain fixed and definite rules or 
 determinations. Amongst them is this rule that 
 combinations or contracts between independent 
 manufacturers or dealers regulating their busi- 
 nesses and restricting each in the conduct of 
 his own separately owned business may es- 
 tablish such a control of the market as to be in- 
 jurious to the public and, thetefore, the courts 
 will not enforce them. But when purchases 
 are made of competing concerns there is no 
 continuance of the previous separate owner- 
 ship and no restriction upon the conduct of 
 businesses separately owned. The purchaser 
 
117 
 
 has increased his productive capacity to the 
 extent of his acquisitions, but neither he 
 nor anyone else is thereby under the ban of 
 any restrictions. The distinction between the 
 two situations is obvious and fundamental, and 
 it is the reason why the rule with respect to 
 combinations does not apply to the ownership of 
 various properties through their acquisition and 
 purchase though they were previously employed 
 in competition. The title to property thus ac- 
 quired passes, and with it the complex mass of 
 rights called ownership, among which is the 
 right to use it for the purposes for which it is 
 adapted. There is no authority at common law 
 for invalidating, limiting or impairing rights of 
 ownership in property so acquired. 
 
 (5) But it will no doubt be argued that if 
 acquisitions originate in a scheme to acquire 
 practically all the properties or plants used 
 in a business with a view to restraining trade 
 or controlling the market it is an illegal com- 
 bination at common law. The proposition, 
 which it will be insisted is sustained by certain 
 cases, has been thus formulated : " An agreement 
 between competitors to surrender control over 
 their properties, and transfer them to one and 
 
118 
 
 the same corporation or organization, where each 
 transfer is conditional upon a similar transfer 
 by each of the other competitors and parties 
 to the arrangement, and where the considera- 
 tion for each transfer is the acquirement of 
 an interest by the seller in the new organization 
 which will have control of all the former com- 
 petitors, is an illegal combination." Whether 
 this is a sound common law doctrine we need not 
 stop to discuss, because the facts of this case do 
 not bring it within its range. But a reference to 
 the cases will be useful in accentuating the pre- 
 cise facts which were involved and the scope of 
 the rule they apply. 
 
 These cases are, Richardson vs. Buhl, 77 
 Mich., 632; People vs. North River Sugar Re- 
 fining Co., 54 Hun, 354 ; State vs. Standard Oil 
 Co., 49 Ohio St., 137 ; State vs. Distillery Co., 
 29 Neb., 700 ; Distilling Co. vs. People, 156 111., 
 448. 
 
 In Richardson vs. Buhl (77 Mich. ,632), it was 
 held that the Diamond Match Company which 
 had been incorporated for the purpose of manu- 
 facturing and dealing in friction matches, and 
 acquiring as far as possible all the plants in the 
 United States, was an unlawful body. The only 
 
119 
 
 authorities cited are cases involving contracts 
 between, or combinations of, independent pro- 
 ducers regulating prices or production. It is 
 not a reasoned determination of the matter, 
 and, the question was imported into the case 
 by the Court on its own motion, in connec- 
 tion with the determination of a collateral 
 matter between individuals, and without its 
 being raised or discussed by counsel, or the pres- 
 ence of the company itself. The case stands by 
 itself and is in direct conflict with Trenton Pot- 
 teries Co. vs. Oliphant, 58 N. J. Eq., 507 ; Oak- 
 dale Co. vs. Garst, 18 R. I., 484; State vs. Con- 
 tinental Tobacco Co., 177 Mo., i ; In re Greene, 
 52 Fed., 104; In re Corning, 51 Fed., 210, 211. 
 The People vs. North River Sugar Refining 
 Co., 54 Hun, 354, was a case of a combination 
 of separately owned and competing manufactur- 
 ing concerns in the form of a trust. It was held 
 that the transfer of the shares of the company 
 by the stockholders to the trustees of the 
 trnst was an ultra vires and unlawful act on 
 the part of the corporation warranting its 
 dissolution, and that the trust in tending to 
 monopoly was an illegal combination. This was 
 not a case of sale, but a pure combination be- 
 
120 
 
 tween independent concerns for the manage- 
 ment and control of their separate businesses 
 as a whole by a body of trustees. The Court 
 of Appeals sustained the judgment on the former 
 ground and did not pass on the question of the 
 combination as a monopoly. (121 N. Y., 582). 
 
 State vs. Standard Oil Co. (49 Ohio State, 137), 
 was determined on the pleadings consisting of the 
 amended petition, the answer thereto, and the 
 demurrer of the State to the answer. These 
 pleadings are given in the report of the case. 
 There is no averment or claim in the amended 
 petition that the trust agreement was a combina- 
 tion in restraint of trade or tending to a mon- 
 opoly, or in any way raising such an issue. 
 What was claimed is shown by the final aver- 
 ment, which is that " by reason of defendant's 
 stockholders, directors and officers signing 
 and entering into such trust agreements and 
 carrying out their provisions and surrendering 
 their stock in defendant and accepting in lieu 
 thereof certificates issued by the nine trustees 
 aforesaid and permitting the corporate powers, 
 business and property of the defendant to be 
 exercised, conducted and controlled by said 
 trustees in manner aforesaid, and by reason of 
 
121 
 
 the acts and omissions of the defendant herein 
 before recited, said defendant has forfeited 
 its corporate rights, privileges powers and 
 franchises." It is, however, significant that 
 the issue of a combination in restraint of trade 
 and tending to a monopoly was tendered by the 
 original petition filed, but that petition was, after 
 the denials of the original answer, superseded 
 by the amended petition, which withdrew such 
 issue from the case, and there was no such issue 
 in the case as it was presented to the Court. 
 The case is only authority for the proposition 
 that the execution of the trust agreement by all 
 of the stockholders and officers of the Standard 
 Oil Co. of Ohio was a corporate act on its part, 
 and as such ultra vires and an abuse of its cor- 
 porate powers. The case did not at all involve 
 the legality of purchases or acquisitions of prop- 
 erty on the theory that they constituted a com- 
 bination. 
 
 In The State vs. Nebraska Distillery Com- 
 pany (29 Neb., 700), there was under considera- 
 tion the combination of independent distillers 
 known as the Whiskey Trust. 
 
 In The Distilling and Cattle Feeding Co. vs. 
 The People (156 111., 448), it was held that this 
 
122 
 
 combination of independent distillers known as 
 the Whiskey Trust was a combination in 
 restraint of trade and tending to create a mo- 
 nopoly, and that the organization of the defend- 
 ant corporation to acquire the plants of the 
 parties to the trust in exchange for its stock as 
 the result of an agreement among them that the 
 corporation should be organized for that pur- 
 pose did not purge the combination of its 
 illegality. 
 
 Eliminating People vs. North River Sugar 
 Refinery (54 Hun, 354), and State vs. Dis- 
 tilling Company (29 Neb., 700), because they 
 involved combinations of separate and inde- 
 pendent concerns for the management of their 
 businesses as a whole by an outside body of 
 trustees, and State vs. Standard Oil Co. (49 
 Ohio St., 137), for the reasons above stated, only 
 Richardson vs. Buhl (77 Mich., 632), and Dis- 
 tilling Company vs. People (156 111., 448), re- 
 main, and of these it is the doctrine and au- 
 thority of the latter case with which we have to 
 deal. 
 
 (6) The ruling of that case precisely stated is, 
 that if a number of independent manufacturers, 
 representing the major part of an industry, 
 
123 
 
 combine to form a trust which is held to 
 be an illegal combination in restraint of 
 trade, and thereupon acting together they 
 organize a corporation to take over their 
 respective properties in exchange for its stock as 
 part of one and the same scheme, the combina- 
 tion is continued in the corporation, there having 
 been merely a change of form. It is not neces- 
 sary for us to question this doctrine as it has no 
 application to the facts presented by the record 
 in this case. We are content to say that it 
 will bear a good deal of examination before it is 
 finally accepted. It is a new departure as there 
 is a real distinction between a combination of in- 
 dependent concerns, each continuing its separate 
 ownership, restricting the freedom of each in the 
 conduct of its business, and the obliteration of that 
 ownership in the transfer of the separate concerns 
 to a new corporation with its own stockholders and 
 their common ownership of the whole enterprise, 
 considering that in the one case there is a restraint 
 upon the separately owned concerns and their 
 management and operation, whilst in the other 
 there is a single ownership and no restraint of 
 any kind. The rule of public policy respecting 
 combinations was never intended to restrict the 
 
124 
 
 right of sale or compel the continued ownership 
 of property by an individual or a corporation. 
 
 There are one or two cases of the same char- 
 acter as the Illinois case, but it is not necessary 
 to treat them separately. 
 
 The Northern Securities case (U. S. vs. North- 
 ern Securities Co., 193 U. S., 197) is also urged 
 in support of the broad proposition that the ac- 
 quisition of competitive plants is a combination 
 in restraint of trade at common law. 
 
 The Northern Pacific and Great Northern Rail- 
 road Companies were competitive trans-conti- 
 nental railroads, each with its own stock holders 
 and board of directors. Neither had the legal 
 power or authority to acquire the other ; in fact, 
 such an acquisition was prohibited. Each was 
 bound, so far as the other and the public were 
 concerned, to maintain its separate competi- 
 tive existence. To bring them under what 
 would be practically a common control and man- 
 agement certain leading stockholders of each 
 company combined together to organize the 
 Northern Securities Company under the laws 
 of the State of New Jersey and to exchange 
 its shares at fixed ratios for the shares of the two 
 companies. This was held to be a combination in 
 
125 
 
 restraint of trade ; the organization of the com- 
 pany being treated as a mere device for the har- 
 monious operation of both roads and the elimina- 
 tion of competition between them. Mr. Justice 
 HARLAN said (p. 346). "The Securities Company 
 is itself a part of the present combination, its 
 head and front ; its trustee." Mr. Justice 
 BREWER said (p. 362) : 
 
 " The transfer of stock to the Securities 
 Companies was a mere incident of the man- 
 ner in which the combination to destroy 
 competition and thus unlawfully restrain 
 trade was carried out." 
 
 There is a fundamental difference between 
 such a combination for the purpose of bring- 
 ing these competing railroad companies under 
 the same control and management through 
 the medium of a holding company, and a 
 purchase of competing manufacturing con- 
 cerns. There is perhaps some analogy between 
 such a combination and the facts involved in 
 the Illinois case, if the vital difference between a 
 manufacturing or trading company and a public 
 service corporation is disregarded. There was in 
 each case an agreement to bring independent 
 concerns under the same management through 
 
126 
 
 the medium of a corporation organized for that ex- 
 press purpose ; but that is radically different from 
 the acquisition by an existing concern through 
 separate transactions of other concerns in the 
 same business to extend the sphere of its opera- 
 tions or to secure a greater degree of necessary 
 independence in vital relations of the industry, 
 such as a regular and adequate supply of the 
 raw material. On this difference we stand. 
 
 The same distinction applies to U. S. vs. Ameri- 
 can Tobacco Co. (164 Fed., 700), as it involved 
 numerous mergers and consolidations of separate 
 and independent companies, of an entirely differ- 
 ent character and nature from the transactions in- 
 volved in this case. 
 
 (7) The result of this examination and review 
 of the authorities is to establish the proposition 
 which we have formulated as our first point. 
 The preceding summary of facts conclusively 
 shows that there was no common-law com- 
 bination or conspiracy, but a separate pur- 
 chase and acquisition of plants and busi- 
 nesses, for a consideration fixed in each 
 case by the parties to the transaction in the 
 main paid in cash, but, in some instances, in 
 whole or in part, in shares of stock, either of the 
 
127 
 
 Standard Oil Co. of Ohio or of the company 
 organized to take over the business acquired. In 
 some instances the physical property was bought 
 and transferred; in others it was acquired 
 through the transfer of the stock of the company 
 which owned it. The transaction was substan- 
 tially the same whichever course was taken, 
 because what was being acquired was the prop- 
 erty and business of the selling concern. The 
 transactions extended over a period of years. 
 They had their specific objects or purposes ; some 
 to refine at points most favorable for par- 
 ticular territories ; others to acquire ware- 
 house and dock facilities ; others to diver- 
 sify products ; others to reach new markets ; 
 others to assure an adequate supply of 
 raw material, and so on. It was a development 
 step by step of a successful institution as the 
 means at its command enabled it to extend its 
 operations ; and not a scheme or plot to absorb 
 a growing and boundless industry. It is a pure 
 figment of the imagination that three or four 
 young men as far back as 1870, in the origins of 
 the industry, when all of its conditions were in 
 a state of demoralization, conceived the idea of 
 appropriating it as their own domain, and saw 
 
128 
 
 in their dreams what has come to pass in the 
 vast increase in space and quantity of the oil 
 production and the world-wide use of the in- 
 numerable products of petroleum. The antiquity 
 of the alleged conspiracy is alone fatal to its 
 serious consideration. The sensible view is 
 that these men were able, alert, intelligent, 
 courageous and prudent ; that by unremitting in- 
 dustry and thorough organization they made the 
 most of every situation, forecast the opportunities 
 of the industry, and rapidly adapted their efforts 
 to changing conditions ; and that the growth and 
 expansion of the Standard were the inevitable 
 results of their genius and enterprise. No doubt, 
 in some instances, men who were also successful 
 in the business, to advance their own interests, 
 sold to them and united with them. There was 
 no law preventing them from doing so, as once a 
 competitor always a competitor has never been, 
 and is not now, a maxim of legal compulsion. 
 In many instances, no doubt, men were desirous 
 of selling because they saw that to conduct the 
 business successfully, with the changes in con- 
 ditions from time to time, required much more 
 capital than they could command, and that it was 
 in their best interest to sell. It would, too, be 
 
129 
 
 folly to ignore the fact that in a business char- 
 acterized by its peculiar conditions and hazards 
 concentration is the law of its development. It is 
 along these lines that the growth and expansion 
 of the Standard Oil Co. finds its explanation, and 
 not in the theory of a combination or conspiracy 
 that is iterated and reiterated on almost every 
 page of the bill in this case. 
 
 POINT II. 
 
 The Act of 1890 did not by its terms 
 or reasonable construction convert that 
 common ownership into an illegal and 
 criminal combination in restraint of trade 
 under Section 1 of the Act. 
 
 (i) In July, 1890, when the Act went into 
 effect, the situation was that the Standard Oil 
 properties were held in an undivided common 
 ownership. The owners had previously trans- 
 ferred the legal title to their respective interests 
 to nine trustees, who then held it in trust for 
 them ; but they were the real owners. It 
 is true that later that particular trust was held 
 
130 
 
 to be illegal, partly on a point of corporation 
 law and partly, though the question was not in 
 the case, on the ground that the trust was an 
 illegal combination because composed of separate 
 concerns and, therefore, but for the trust, com- 
 petitive, which was not the fact. The dissolu- 
 tion of the trust would simply eliminate it 
 without disturbing the common ownership. 
 The common ownership in 1882 and 1890 
 is not disputable. In 1890 the properties 
 consisted of refineries employed in the manu- 
 facture of a great many different products, 
 but principally illuminating oil ; of private 
 pipe lines to gather the necessary sup- 
 ply of crude oil at the various oil 
 fields and carry it to the refineries ; of 
 certain public pipe lines open to the use of pro- 
 ducers and refiners generally, but not, for the 
 reasons which have been stated, used by them ; 
 and marketing facilities in various parts of this 
 and foreign countries. The properties were 
 operated as a single, unified business and an 
 organic whole. Their product was sold partly 
 in intrastate and partly in interstate and foreign 
 trade. 
 
131 
 
 The ownership of the refining properties and 
 the manufacturing of the products were not sub- 
 ject to the jurisdiction of Congress (U. S. vs. E. C. 
 Knight Co., 156 U. S., i). The intrastate trade 
 was not subject to its jurisdiction (Addy stone 
 Pipe Co. vs. U. S., 21 1). The same is true of the 
 private pipe lines. Only the interstate and 
 foreign trade and the interstate transportation of 
 the common carrier pipe lines, to the extent that 
 there was any, were subject to its jurisdiction, 
 and the parts of the business on which the 
 Act of 1890 bore. There was no existing 
 combination with respect to those parts as they 
 were merely an incident of the ownership of the 
 manufacturing properties and a part of the pipe 
 line properties. If there were then any out- 
 standing contracts with other parties restraining 
 interstate or foreign trade the operation of the 
 Act would be to denounce them and make their 
 further performance illegal. But the common 
 ownership of the properties and their operation 
 for the purposes to which they were adapted as 
 a unit was a legal situation which was not 
 affected by the Act. 
 
 (2) Even if Congress had the power, it did 
 not seek or attempt by the first section of the 
 
132 
 
 Act to denounce as illegal previous acquisitions 
 of competitive properties or disturb existing 
 titles or rights of ownership. Had it sought to 
 do so appropriate and explicit language would 
 have been used. There is no such language. 
 The phrases " contract, combination or con- 
 spiracy in restraint of trade " are not appro- 
 priate for that purpose. Those phrases were 
 well known and had a settled legal significance. 
 They were contracts or combinations of an 
 executory nature restricting the liberty of the 
 parties or others in the conduct of their busi- 
 nesses to the injury of the public. They did 
 not, in any way, involve executed transfers of 
 property or their incidental rights of ownership. 
 It was against such executory contracts, com- 
 binations and conspiracies that the Act of 1890 
 was directed. This is borne out by the conditions 
 out of which the legislation grew. The period of 
 ten years or so prior to the passage of the Act 
 had been marked by combinations of independent 
 competitive concerns ; some of them on a very 
 large scale. These combinations took different 
 forms. There were agreements creating a sell- 
 ing agency or a central committee to regulate 
 production and fix prices. There were associations 
 
133 
 
 of independent and competing manufacturers 
 and merchants to maintain prices by means of the 
 commercial boycott. Boards of trustees were 
 created to hold the legal title of the stocks 
 of independent and competing corporations 
 to secure co-operation as to production and prices. 
 Speaking generally it may be said that every 
 method for combining competitive concerns for the 
 regulation of production and prices was adopted 
 that human ingenuity could devise. These com- 
 binations were deemed to be injurious to the pub- 
 lic, and the purpose of the first section of the 
 Act was to denounce and prohibit them. That 
 purpose was accomplished without any interfer- 
 ence with executed transfers of property or ex- 
 isting rights of ownership. 
 
 (3) The case nearest in its facts to this case 
 arose in 1892 and was the occasion of a profound 
 consideration of the Act of 1890 by the late Mr. 
 Justice JACKSON, then a Circuit Judge. We refer 
 to In Re Greene (52 Fed., 104). It grew out of 
 an indictment in Massachusetts of a number of 
 individuals who were the principal persons con- 
 nected with the Distilling & Cattle Feeding Co., 
 organized in the year February n, 1890, under 
 the laws of Illinois. It was averred that the Com- 
 
134 
 
 pany had as it appears prior to the passage of 
 the Act obtained control by purchase, renting 
 and leasing of 70 distilleries within the United 
 States used for the manufacture of distillery prod- 
 ucts ; that each of the distilleries was when ac- 
 quired a separate and competing concern ; and 
 that by means of this ownership and control the 
 Company manufactured 75% of the distillery pro- 
 ducts and monopolized the interstate trade and 
 commerce therein. It was further averred that the 
 Company, to maintain its monopoly, had agreed 
 with various dealers in Massachusetts to pay re- 
 bates on condition that they bought exclusively 
 from the Company. The Defendant, who was held 
 under a warrant awaiting an order for his removal 
 to the district of Massachusetts to answer 
 the indictment, applied for a writ of habeas corpus, 
 which application Judge JACKSON granted, hold- 
 ing that the Act of 1890 did not intend to de- 
 clare that the acquisition and ownership of these 
 properties with the control of the trade that it 
 gave was an offence under the Act. The pertinent 
 portions of the opinion are quoted under a later 
 head of this brief. This case has been frequently 
 cited, and we are not aware that its doctrine has 
 been authoritatively disapproved or its author- 
 
135 
 
 ity impaired. It is claimed that the decision in 
 the Northern Securities case has that effect, but 
 the fundamental differences which distinguish 
 them rebut that contention as we have already 
 shown. 
 
 (4) An analysis of the decisions of the Su- 
 preme Court of the United States under the 
 Act of 1890 confirms our position under this 
 point. 
 
 (a) United States vs. E. C. Knight Co. (156 
 U. S., i) held that an acquisition of sugar re- 
 fineries in the State of Pennsylvania by the 
 American Sugar Refining Co., which owned a 
 large majority of the sugar refineries in the 
 United States giving it a practical control of 
 the business, was not within the Act of 1890 ; 
 that it bore no direct relation to commerce be- 
 tween the States though the intention was to 
 sell the product throughout the States; that 
 manufacturing is not commerce ; and that it did 
 not follow that an " attempt to monopolize, or 
 the actual monopoly of the manufacture, was an 
 attempt, whether executory or consummated, to 
 monopolize commerce, even though, in order to 
 dispose of the product the instrumentality of 
 commerce was necessarily invoked." 
 
136 
 
 (b) United States vs. Trans-Missouri Asso- 
 ciation (166 U. S., 290) and United States vs. 
 Joint Traffic Association (171 U. S., 505) held 
 that a combination between a large number of 
 railroad companies creating a body or committee 
 to fix rates was a combination in restraint of 
 trade within the meaning of the Act. The 
 agreement between the companies restricted 
 their power of fixing their own rates by its 
 delegation in a measurable degree to an outside 
 body, and it was a restriction vitally affecting 
 the interests of the public. 
 
 (c) Hopkins vs. United States (171 U. S., 578) 
 and Anderson vs. United States (171 U. S., 604) 
 held that the restrictive rules of certain live 
 stock exchanges related to a business that only 
 incidentally affected interstate commerce; and 
 that the Act only applies to agreements and 
 combinations directly restraining such com- 
 merce. 
 
 (d) Addystone Pipe & Steel Co. vs. United 
 States (175 U. S., 211) was a combination be- 
 tween independent competing manufacturers 
 providing machinery and methods for fixing 
 prices in such a way as to enhance them in a 
 very aggravated form. 
 
137 
 
 (e) Montague vs. Lowry (193 U. S., 38) was a 
 combination of manufacturers and dealers in 
 tiles, mantels and grates for the purpose of regu- 
 lating the trade in those articles in California 
 in various particulars, including prices, and 
 establishing a commercial boycott on manufac- 
 turers and dealers who did not become members 
 of the association and submit to its regulations. 
 
 (/) Northern Securities vs. United States (193 
 U. S., 197) was a combination of the principal 
 stockholders of two parallel and competing trans- 
 continental railway systems to establish a com- 
 mon control and eliminate competition by means 
 of a holding company. 
 
 (g) Swift vs. United States (196 U. S., 375) 
 involved a combination of independent concerns 
 for the conduct of the business of each in 
 certain specified particulars calculated and in- 
 tended to monopolize the trade. The injunction 
 which issued was based on the bill, as the defend- 
 ants stood on their demurrer which was over- 
 ruled. 
 
 (h) Cincinnati Packet Co. vs. Bay (200 U. S., 
 179) held that a covenant not to engage in the 
 shipping business between certain points for a 
 period of five years, and to maintain rates be- 
 
138 
 
 yond one of the points, in connection with a sale 
 of vessels, was not a violation of the Act. 
 
 (z) Loewe vs. Lawler (208 U. S., 274) held 
 that a combination of labor organizations to boy- 
 cott the interstate trade of a manufacturer was 
 a conspiracy in restraint of trade within the 
 Act. 
 
 To these cases may be added In Re Debs (158 
 U. S., 564), which practically held that the 
 physical obstruction of interstate transportation 
 by labor associations was a conspiracy in re- 
 straint of trade within the Act. 
 
 All these cases, in which the Act was held 
 to be applicable, involved combinations in 
 the common law sense affecting interstate 
 commerce ; some by restrictions imposed 
 on the members of the combination ; others 
 by restrictions or acts limiting or destroying 
 the activities of parties outside of the com- 
 bination ; and they declare no doctrine which 
 denounces such an acquisition and ownership of 
 previously competing properties as appears in 
 this case. If that acquisition and ownership are 
 to be brought within the Act it will be only by 
 a radically new interpretation and application. 
 
139 
 
 POINT III. 
 
 Congress could not constitutionally con- 
 vert the ownership of the properties and 
 the use to which they were put into an 
 illegal and criminal combination or con- 
 spiracy. 
 
 The acquisitions of the properties vio- 
 lated no law when they occurred, and the 
 title of the common owners was a valid, 
 legal title. No principle of the common law 
 invalidated titles or ownership even if acquired 
 in connection with contracts or combinations 
 in restraint of trade. The right to own the 
 properties involved the right to use and en- 
 joy them. " Congress has not the power or 
 authority under the commerce clause, or any 
 other provision of the Constitution, to limit and 
 restrict the right of corporations created by the 
 States or the citizens of the States in the acquisi- 
 tion, control and disposition of property " (In re 
 Greene, 52 Fed., 104). The Chief Justice said 
 in United States vs. E. C. Knight Co. (156 
 U. S., i, p. 1 6) that " Congress did not at- 
 tempt to make criminal the acts of persons 
 in the acquisition and control of property 
 
140 
 
 which the States of their residence or creation 
 sanctioned or permitted," because " it was in the 
 light of well settled principles that the Act of 
 July 2d, 1890, was framed/' plainly implying 
 that it was beyond the power of Congress to 
 make such acts criminal or declare them illegal. 
 Judge JACKSON also said in the Greene case that 
 " in construing and applying the provions of the 
 Act to the specific offenses charged it must be 
 assumed that Congress did not intend to make 
 the enactment either retroactive or give it an ex 
 post facto operation or effect," and the basis of 
 such an assumption was the lack of power to do 
 so as applied to the previous acquisition and 
 ownership of distilleries in such number as to 
 control the trade and commerce in their products 
 which appeared in that case. It is really too 
 plain for argument that Congress was without 
 the power to declare the acquisition and owner- 
 ship of the properties in question unlawful or a 
 criminal offense, and compel directly or indi- 
 rectly the disintegration of that ownership. 
 So, also, it is not within the power of Con- 
 gress to disturb the ownership or prevent 
 the use of manufacturing property simply be- 
 cause the product becomes the subject of 
 
141 
 
 interstate or commerce. If, however, when the 
 product becomes the subject of interstate trade 
 or commerce acts are done, or agreements are 
 made, with respect to it in that relation that are 
 in restraint of trade, it is within the power of 
 Cougress to denounce those acts and agreements 
 and empower the Courts to retrain them. That, 
 we submit, is the power which it exercised in the 
 passage of this Act. 
 
 POINT IV. 
 
 Even if the acquisitions of the Standard 
 properties and their common ownership 
 had occurred since the Act of 1890 went 
 into effect they would not constitute an 
 illegal and criminal combination or con- 
 spiracy within the Act. 
 
 The tendency of the cases is to sustain the 
 position that the first section of the Act of 
 1890 is directed at combinations of independent 
 concerns for the regulation of production and 
 prices whatever their form, and no more sought 
 to affect or restrict the right of purchase or 
 acquisition than did the common law. This 
 appears not only from what has been judicially 
 
142 
 
 declared to be the object and purposes of the 
 Act, but in what has been said as to transactions 
 which are not within its scope. 
 
 In one of the earliest cases (1892), In re Corn- 
 ing (51 Fed., 205), RICKS, J., said (pp. 211-212) : 
 
 " From those debates (in Congress) it is 
 evident that the Congress did not intend to 
 limit the amount of capital a citizen should 
 invest in any line of business or restrain 
 his energy or enterprise in acquiring for 
 himself all the trade possible in such busi- 
 ness, provided in doing so he did not by 
 illegal contracts or devices restrain others 
 from pursuing the same business, or de- 
 prive the public from enjoying the advan- 
 tages of a free use of capital, skill and ex- 
 perience of competitors." 
 
 In the exhaustive examination of the act by 
 Mr. Justice JACKSON, not long after its passage, 
 in Re Greene (52 Fed., 104), he said: 
 
 " The enactment was manifestly aimed at 
 the trust combinations and associations 
 formed by individuals and corporations 
 which the State Courts have in most in- 
 stances declared illegal." 
 
 And further (pp. 66, 67) : 
 
 " Congress may place restrictions and 
 limitations upon the right of corporations 
 
143 
 
 created and organized under its authority to 
 acquire, use and dispose of property. It may 
 also impose such restrictions and limitations 
 upon the citizen in respect to the exercise of 
 a public privilege or franchise conferred by 
 the United States. But Congress certainly 
 has not the power or authority under the 
 Commerce Clause or any other provision of 
 the Constitution to limit and restrict the 
 right of corporations created by the states 
 or the citizens of the states in the acquisi- 
 tion, control and disposition of property. 
 . . . It is equally clear that Congress 
 has no jurisdiction over and cannot make 
 criminal the aims, purposes and intentions 
 of persons in the acquisition and control of 
 property which the states of their residence 
 or creation sanction and permit. " 
 
 In U. S. vs. E. C. Knight Co. (156 U. S., i) 
 it was said (p. 16) : 
 
 " It was in the light of well settled prin- 
 ciples that the act of July 2, 1890, was 
 framed. Congress did not attempt to assert 
 the power to deal with monopoly directly as 
 such ; or to limit and restrict the rights of 
 corporations created by the States or the 
 citizens of the States in the acquisition, 
 control, or disposition of property ; or to 
 regulate or prescribe the price or prices at 
 which such property or the products thereof 
 should be sold ; or to make criminal the 
 
144 
 
 acts of persons in the acquisition and con- 
 trol of property which the State of their 
 residence or creation sanctioned or per- 
 mitted. Aside from the provisions ap- 
 plicable where Congress might exercise 
 municipal power, what the law struck at 
 was combination, contracts, and conspiracies 
 to monopolize trade and commerce among 
 the several States or with foreign nations. 
 . . . The subject matter of the sale 
 was shares of manufacturing stock, and the 
 relief sought was the surrender of property 
 which had already passed and the sup- 
 pression of the alleged monopoly in manu- 
 facture by the restoration of the status quo 
 before the transfers ; yet the act of Con- 
 gress only authorized the Circuit Courts to 
 proceed by way of preventing and restrain- 
 ing violations of the act in respect of con- 
 tracts, combinations, or conspiracies in re- 
 straint of interstate or international trade 
 or commerce. " 
 
 In U. S. vs. Trans-Missouri Freight Associa- 
 tion (166 U- S., 290) it was said, in the opinion 
 of the Court with reference to contracts speci- 
 fically designated at common law, " contracts in 
 restraint of trade " (p. 329) : 
 
 " A contract which is the mere accom- 
 paniment of the sale of property and thus 
 entered into for the purpose of enhancing 
 
145 
 
 the price at which, the vendor sells it, which 
 in effect is collateral to such sale and where 
 the main purpose of the whole contract is 
 accomplished by such sale, might not be 
 included within the letter or spirit of the 
 statute in question." 
 
 There is no intimation in this saving clause 
 of the opinion that sales themselves of property 
 employed in a business from one competitor to 
 another are or may be in restraint of trade. 
 
 In U. S. vs. The Joint Traffic Association (171 
 U. S., 505), it was said (pp. 567-568) : 
 
 " As examples of the kinds of contracts 
 which are rendered illegal by this construc- 
 tion of the act, the learned counsel suggests 
 all organizations of mechanics engaged in 
 the same business for the purpose of limit- 
 ing the number of persons employed in the 
 business, or of maintaining wages ; the for- 
 mation of a corporation to carry on any par- 
 ticular line of business by those already en- 
 gaged therein ; a contract of partnership or 
 of employment between two persons previ- 
 ously engaged in the same line of business ; 
 the appointment by two producers of the 
 same person to sell their goods on commis- 
 sion ; the purchase by one wholesale mer- 
 chant of the product of two producers ; the 
 lease or purchase by a farmer, manufacturer 
 or merchant of an additional farm, manufac- 
 
146 
 
 tory or shop ; the withdrawal from business 
 of any farmer, merchant or manufacturer ; 
 a sale of the goodwill of a business with an 
 agreement not to destroy its value by en- 
 gaging in similar business ; and a covenant 
 in a deed restricting the use of real estate. 
 It is added that the effect of most business 
 contracts or combinations is to restrain 
 trade in some degree. This makes quite a 
 formidable list. It will be observed, how- 
 ever, that no contract of the nature 
 above described is now before the court, and 
 and there is some embarrassment in assum- 
 ing to decide herein just how far the Act 
 goes in the direction claimed. Neverthe- 
 less, we might say that the formation of 
 corporations for business or manufacturing 
 purposes has never, to our knowledge, been 
 regarded in the nature of a contract in re- 
 straint of trade or commerce. The same 
 may be said of the contract of partnership. 
 It might also be difficult to show that the 
 appointment by two or more producers of 
 the same person to sell their goods on com- 
 mission was a matter in any degree in re- 
 straint of trade. We are not aware that it 
 has ever been claimed that a lease or pur- 
 chase by a farmer, manufacturer or mer- 
 chant of an additional farm, manufactory or 
 shop, or the withdrawal from business of 
 any farmer, merchant or manufacturer, re- 
 strained commerce or trade within any legal 
 definition of that term ; and the sale of a 
 
147 
 
 good-will of a business with an accompany- 
 ing agreement not to engage in a similar 
 business was instanced in the Trans- 
 Missouri case as a contract not within the 
 meaning of the act ; and it was said that 
 such a contract was collateral to the main 
 contract of sale and was entered into for the 
 purpose of enhancing the price at which the 
 vendor sells his business.' ' 
 
 The view thus expressed excludes from the 
 operation of the Act a vast mass of transactions 
 which interfere with competition. " Interference 
 with competition " and " restraint of trade" can- 
 not therefore be convertible terms though they 
 are too often assumed to be so. If a part- 
 nership is formed which combines the energies 
 and resources of two or three or more 
 competitors in the same business there is an 
 interference with competition, but not, as the 
 Court says, a restraint of trade. So, if a 
 corporation is formed which acquires property 
 and plants employed in a business which have 
 been competitive there is an interference with 
 competition, but again, not a restraint of trade. 
 It would seem to be a necessary conclusion that 
 confusion results from identifying too closely 
 acts interfering with competition with acts re- 
 
148 
 
 straining trade. This has led to all the cur- 
 rent motions about competition being the one 
 vital matter determining whether acts are in 
 restraint of trade or not. What the phrase 
 " combination in restraint of trade " really in- 
 volves is a restriction of the freedom of action 
 of the parties to the contract or combination or 
 others in the control, management or conduct 
 of their respective businesses. Combinations 
 and agreements which do not involve such re- 
 strictions are not combinations or agreements 
 in restraint of trade, although they may incident- 
 ally interfere with competition. This is borne 
 out by the exclusion of transactions of the kind 
 mentioned by Mr. Justice PECKHAM from the 
 operation of the Act although they unques- 
 tionably interfere with competition. 
 
 In Robinson vs. Suburban Brick Co. (127 
 Fed., 804), and A. Booth & Co. vs. Davis (127 
 Fed., 875), a covenant in a contract for the sale 
 of the property of a competitor restricting the 
 vendor from engaging in the business was held 
 to be valid. 
 
 In the case last cited it is said (p. 878) : 
 
 " The transaction by which the com- 
 plainant acquired the title and interest for 
 
149 
 
 which it seeks protection in this cause was 
 an out and out purchase of the vendor cor- 
 poration's property and good will, and of the 
 ancillary agreement of its stockholders, the 
 breach of which agreement is the gravamen 
 of the complainant's case. That such a 
 transaction is lawful seems clear. In U. S. 
 v. Addyston Pipe & Steel Co. (85 Fed., 271- 
 281) Judge TAFT considers the question 
 here involved, and in a forcible opinion 
 demonstrates that agreements by the seller 
 of property or business not to compete with 
 the buyer in such a way as to impair the 
 business sold are perfectly valid. " 
 
 In Cincinnati Packet Co. vs. Bay (200 U. S., 
 179 it was said : 
 
 " Presumably all there was to sell besides 
 certain instruments of competition was the 
 competition itself, and the purchasers did 
 not want the vendors name." 
 
 In Smiley vs. Kansas (196 U. S., 447) it was 
 said (p. 356) : 
 
 " Undoubtedly there is a certain freedom 
 of contract which cannot be destroyed by 
 legislative enactment. In pursuance of that 
 freedom parties may seek to further their 
 business interests, and it may not be always 
 easy to draw the line between those con- 
 tracts which are beyond the reach of the 
 police power and those which are subject to 
 
150 
 
 prohibition or restraint. But a secret ar- 
 rangement by which, under penalties, an 
 apparently existing competition among all 
 the dealers in a community is one of the 
 necessaries of life is substantially destroyed, 
 without any merging of interests through 
 partnership or incorporation, is one to which 
 the police power extends." 
 
 POINT V. 
 
 The acquisition by the Standard Oil Co. 
 (of New Jersey) from the common owners 
 of their shares in the so-called subsidiary 
 companies was not an illegal and criminal 
 contract, combination or conspiracy within 
 the Act of 1890. 
 
 (i) There is no combination under the Act 
 unless one is formed which restrains trade, that 
 is, which restricts the freedom of competitors 
 in carrying on their respective businesses. 
 In 1899 all the Standard Oil properties 
 were held in a common ownership, and that 
 common ownership had existed from the time 
 of the acquisition of every property acquired, and 
 in all subsequent extensions, developments and 
 
15J 
 
 expansions as they occurred. All the properties 
 were acquired for the individuals who were 
 stockholders of the Standard Oil Company of 
 Ohio. The stockholders of that company be- 
 came the holders of the trustees' certificates, 
 and the certificate holders, through the conver- 
 sion of their certificates into the shares of the 
 twenty companies and the exchange of those 
 shares for the shares of the Standard Oil Com- 
 pany of New Jersey, one of their own corpora- 
 tions, became the stockholders of the Standard 
 Oil Company of New Jersey, and as such, the 
 owners in precisely the same proportion of all 
 the properties as they had been as certificate 
 holders and as stockholders of the Standard Oil 
 Company of Ohio. There has never been any 
 separate ownership of any of the properties since 
 their acquisition. Every owner has all along been 
 the owner of his same proportionate share in all 
 the properties and companies corresponding 
 first to his stock ownership in the Standard Oil 
 Company of Ohio, then to his certificate owner- 
 ship, and now to his stock ownership in the 
 Standard Oil Company of New Jersey. When 
 these properties and companies were owned by or 
 held for the stockholders of the Standard Oil 
 
152 
 
 Company of Ohio there was no competitive rela- 
 tion between them in the sense in which that 
 term is used when there is under consideration 
 whether a certain transaction or combination is 
 in restraint of trade. Properties, plants and 
 companies owned by the same persons in a com- 
 mon ownership are not independent or com- 
 petitive from the point of view of the Act of 
 1890. 
 
 (2) When the so-called trust of 1882 was 
 formed there was no union or fusion of competi- 
 tive properties and companies. The trust was 
 not formed for any reason or purpose hav- 
 ing any relation to competition or the suppres- 
 sion of competition. Prior to its formation the 
 managers of every separate concern were the 
 appointees of the common owners, and the 
 concerns were operated and managed in the 
 interest of the common ownership. The 
 owners, through the medium of the trust, 
 selected nine of their number to act for them in 
 selecting these officers and managers, which did 
 not in any way change their ownership or affiect 
 the relations of the concerns to each other. The 
 motive for the creation of the trust was that each 
 owner might have in the trust certificates a con- 
 venient and usable evidence of his interest. 
 
153 
 
 (3) When the trust was dissolved there was no 
 change of ownership, and no change in the rela- 
 tion of the separate concerns to each other. The 
 same owners selected the officers and managers 
 of the concerns. When the shares were ex- 
 changed for shares of the Standard Oil Company 
 (of New Jersey) there was again no change of 
 ownership. If twenty men own a twentieth 
 interest in each of twenty corporations represented 
 by a twentieth of the shares in each corporation, 
 no real change of ownership is worked by the 
 transfer of all of their shares to one of the cor- 
 porations in exchange for an equivalent number 
 of its shares. As owners each of one-twentieth 
 of the shares of the one company their ownership 
 is just the same as when they each owned one- 
 twentieth of the shares of each of the companies. 
 The indisputable and controlling fact is that 
 there was no competitive relation between the 
 concerns after their original acquisition thirty 
 years ago and more. 
 
 (4) Under these circumstances we submit that 
 the transfer of the shares of the various com- 
 panies for their equivalent in shares of the 
 Standard Oil Company (of New Jersey), which 
 represented precisely the pre-existing propor- 
 
154 
 
 tionate interests in the common property, was 
 not a combination in restraint of trade within 
 the meaning of the Act of 1890. 
 
 POINT VI. 
 
 There is no monopolization or attempt 
 to monopolize. 
 
 (i) On pages 84, 85, and 86 of the Bill it is 
 alleged that the Standard Oil trust during the 
 period from 1882 to 1899 and the Standard Oil 
 Company since 1889, and their various subsidiary 
 corporations and the individual defendants 
 named, acting through both the trust and 
 said corporations, have monopolized the oil 
 business by means not only of the various al 
 leged combinations constituting the acquisition 
 of the properties, but by certain additional 
 means, the allegations respecting which are set 
 forth in the sub-divisions of the Bill from and 
 including sub-division 6 to and including sub- 
 division 28. We have so far dealt with the ac- 
 quisition and ownership of the Standard prop- 
 erties and have shown that they did not con- 
 
155 
 
 stitute a combination in restraint of trade. The 
 common ownership itself, therefore, does not 
 constitute a monopoly. We now proceed to con- 
 sider the remaining allegations respecting the 
 monopolization of the trade. 
 
 This proceeding was begun in December, 
 1906. It was instituted under Section 4 of 
 the Act of 1890 which authorizes proceed- 
 ings in equity " to prevent and restrain viola- 
 tions of this Act." There would be no existing 
 violation of the Act to restrain unless the de- 
 fendants, when the proceeding was begun, 
 monopolized or were attempting to monopolize 
 the oil business. Whether that condition ex- 
 isted is the subject matter of this point ; and 
 first we have to ascertain what is a monopoly or 
 monopolization within the Act. 
 
 (2) There has as yet been no authoritative defi- 
 nition by the Supreme Court of what constitutes 
 a monopoly within the meaning of the Act of 
 1890. There have been references to the term, 
 but they do not furnish an authoritative defini- 
 tion. Though it has been prominent in public dis- 
 cussion in recent years it has generally seemed 
 sufficient to use it without attaching any specific 
 meaning to it, and more as a term of reproach 
 
156 
 
 than as a specific legal or economic conception. 
 It is not uncommon to hear size in and of itself 
 treated as monopoly. According to that view 
 there is a point at which growth and expansion, 
 however legitimate, become illegal and criminal. 
 However convenient that use of the term may 
 be for popular purposes it is not its legal mean- 
 ing or signification. At common law a monop- 
 oly had a precise definition ; it was " a license 
 or privilege allowed by the King for the sole 
 buying and selling, making, working or using 
 of anything whatsoever whereby the subject in 
 general is restrained from that liberty of manu- 
 facturing or trading which he had before " 
 (Blackstone, Vol. 4, p. 160). It is said that in 
 modern legislation and judicial usage it has a 
 broader application than that of an exclusive 
 right based on a grant. Just what it means in 
 that broader use of the term is the point to be 
 determined. A governmental grant, as in the 
 case of a patent monopoly, it is said, is no longer 
 necessary, and that may be assumed to be true. 
 But monopoly still imports the idea of exclusive- 
 ness, and an exclusiveness existing by virtue 
 of a restraint of the liberty of others. 
 It may be a practical as distinguished from 
 
157 
 
 a theoretical or complete exclusiveness, but 
 that does not eliminate trie restraint of others 
 as the essential element. With the common law 
 monopoly that restraint resulted from the grant 
 of the exclusive right or privilege. There 
 must be some substitute for the grant as a 
 source of the restraint essential to the condition 
 of exclusiveness which constitutes monopoly. 
 Conceivable sources are contracts, combinations 
 and conspiracies excluding individuals and capital 
 on a comprehensive scale and in an effective degree 
 from participation in a particular business. What- 
 ever the magnitude of a single concern may be 
 and whatever the volume of the business there 
 may be in its hands, it is not, we submit, a 
 monopoly unless " the subject in general is re- 
 strained from that liberty of manufacturing or 
 trading which he had before ", by definite and 
 assignable restrictive contractual obligations, well 
 known as contracts in restraint of trade, combina- 
 tions affecting the liberty of their members or 
 constraining that of outsiders, or conspiracies to 
 injure, curtail or destroy the business of others 
 of a criminal or tortious character at common 
 law, or other unlawful or tortious acts having 
 that effect. These very general observations are 
 
158 
 
 offered as an introduction to what has been said 
 on the subject in cases which have arisen under 
 the Act of 1890. 
 
 (3) In American Biscuit & Manf'g Co. vs. 
 Klotz, 44 Fed., p. 724, it was said/^r Curiam: 
 
 " In construing the federal and state 
 statutes, we exclude from consideration all 
 monopolies which exist by legislative grant ; 
 for we think the word l monopolize ' cannot 
 be intended to be used with reference to the 
 acquisition of exclusive rights under gevern- 
 ment concession, but that the lawmaker has 
 used the word to mean ( to aggregate ' or ' con- 
 centrate ' in the hands of few, practically, 
 and, as a matter of fact, and according to the 
 known results of human actions, to the ex- 
 clusion of others ; to accomplish this end by 
 what, in popular language, is expressed in 
 the word ' pooling', which may be defined 
 to be an aggregation of property or capital 
 belonging to different persons, with a view 
 to common liabilities and profits. The ex- 
 pression in each law ' combination in the 
 form of trusts' would seem to point to just 
 what, in popular language, is meant by 
 pooling. . . . 
 
 In re Corning (51 Fed., 205), RICKS, J., said: 
 
 " It is not averred that, when defendants 
 purchased their 70 distilleries, they ob- 
 
159 
 
 ligated the vendors not to build other dis- 
 tilleries, or not to continue in the distillery 
 business in the future. It is not averred 
 that defendants attempted in any way to 
 bind the vendors to withhold their capital 
 or skill or experience in the business from 
 the public in the future. There is no aver- 
 ment that the defendants in any manner, or 
 at any time, attempted to control the busi- 
 ness of the remaining one-fourth of the dis- 
 tilleries in the United States, or in any way 
 attempted to limit their output, or by agree- 
 ment with them control the price at which 
 their product should be sold, or in any de- 
 gree restrained their trade, or limit the ter- 
 ritory over which their trade should extend. 
 The full scope of the averments in this re- 
 spect is that before this law was passed by 
 Congress the defendants legally purchased 
 with their own capital three-fourths of the 
 distilleries in the United States, and that 
 they produced 77,000,000 gallons of dis- 
 tillery products, and sold these products in 
 the markets of the several states at the best 
 possible prices ; and that they continued so 
 to own and operate said distilleries, and so 
 to sell their products, after the passage of 
 this Act. This they did without any at- 
 tempt at any time, by contract, to control 
 the production of the other distilleries, or 
 the prices at which they should sell, or 
 without any contract with such distillers in 
 any way restraining trade. The indict- 
 
160 
 
 ment, therefore, in my judgment, wholly 
 fails to charge a crime, so far as the pur- 
 chase of said distilleries or their manu- 
 facture of distilled products before the 
 passage of the Act is concerned, or 
 so far as they are charged with continuity 
 to own and operate them with unlawful in- 
 tent after the passage of the Act. * * * 
 From these debates (in Congress) it is evi- 
 dent that the Congress did not intend to 
 limit the amount of capital a citizen should 
 invest in any line of business, or restrain 
 his energy or enterprise in acquiring for 
 himself all the trade possible in such busi- 
 ness, provided in doing so he did not, by 
 illegal contracts or devices, restrain others 
 from pursuing the same business, or de- 
 prive the public from enjo3'ing the advan- 
 tages of the free use of capital, skill and 
 experience of competitors. 7 ' 
 
 In re Greene (52 Fed., 104) (1892), JACKSON, 
 Circuit Judge, said (p. 115) : 
 
 " It is not very clear what Congress 
 meant by the second section of the Act of 
 July 2, 1890, in declaring it a misdemeanor 
 to t monopolize,' or ' attempt to monopo- 
 lize,' any part of the trade or commerce 
 among the states or with foreign nations. 
 It is very certain that Congress 
 could not, and did not, by this enact- 
 ment, attempt to prescribe limits to the 
 
161 
 
 acquisition, either by the private citizen or 
 state corporation, of property which might 
 become the subject of interstate commerce, 
 or declare that, when the accumulation or 
 control of property by legitimate means 
 and lawful methods reached such magni- 
 tude or proportions as enabled the owner or 
 owners to control the traffic therein, or any 
 part thereof, among the states, a criminal 
 offense was committed by such owner or 
 owners. All persons, individually or in 
 corporate organizations, carrying on busi- 
 ness avocations and enterprises involving 
 the purchase, sale, or exchange of articles, 
 or the production and manufacture of com- 
 modities, which form the subjects of com- 
 merce, will, in a popular sense, monopolize 
 both state and interstate traffic in such ar- 
 ticles or commodities just in proportion as 
 the owner's business is increased, enlarged, 
 and developed. But the magnitude of a 
 party's business, production, or manufac- 
 ture, with the incidental and indirect powers 
 thereby acquired, and with the purpose of 
 regulating prices and controlling interstate 
 traffic in the articles or commodities form- 
 ing the subject of such business, produc- 
 tion, or manufacture, is not the monopoly, 
 or attempt to monopolize, which the statute 
 condemns. 
 
 " A ' monopoly/ in the prohibited sense, 
 involves the element of an exclusive privi- 
 lege or grant which restrained others from 
 
162 
 
 the exercise of a right or liberty which they 
 had before the monopoly was secured. In 
 commercial law, it is the abuse of free com- 
 merce, by which one or more individuals 
 have procured the advantage of selling alone 
 or exclusively all of a particular kind of 
 merchandise or commodity to the detriment 
 of the public. As defined by Blackstone (4 
 Bl. Comm., 159), and by Lord COKE (3 Co. 
 Inst, 181), it is a grant from the sovereign 
 power of the state by commission, letters 
 patent or otherwise, to any person or corpo- 
 ration, by which the exclusive right of 
 buying, selling, making, working or using 
 anything is given. When this section of 
 the Act was under consideration in the 
 Senate, distinguished members of the judi- 
 ciary committee and lawyers of great ability 
 explained what they understood the term 
 ( monopoly ' to mean ; one of them say- 
 ing : * It is the sole engrossing to 
 a man's self by means which prevent 
 other men from engaging in fair com- 
 petition with him.' Another senator defined 
 the term in the language of Webster's dic- 
 tionary : ' To engross or obtain, by any 
 means, the exclusive right of, especially the 
 right of trading, to any place or with any 
 country, or district ; as to monopolize the 
 India or Levant trade.' It will be noticed 
 that, in all the foregoing definitions of 
 ' monopoly ', there is embraced two leading 
 elements, viz., an exclusive right or privi- 
 
163 
 
 lege, on the one side, and a restriction 
 or restraint on the other, which will operate 
 to prevent the exercise of a right or liberty 
 open to the public before the monopoly was 
 secured. This being, as we think, the 
 general meaning of the term, as employed 
 in the second section of the statute, an 
 * attempt to monopolize ' any part of the 
 trade or commerce among the states must 
 be an attempt to secure or acquire an exclu- 
 sive right in such trade or commerce by 
 means which prevent or restrain others 
 from engaging therein. It was certainly 
 not a * monopoly ', in the legal sense of 
 the term, for the accused or the Distilling 
 & Cattle Feeding Company to own 70 dis- 
 tilleries, and the products thereof, whether 
 such products amounted to the whole or a 
 large part of what was produced in the 
 country. Their ownership and control of 
 such products, as subjects of trade and com- 
 merce, is not what the statute condemns, but 
 the monopoly or attempt to monopolize the 
 interstate trade or commerce therein. In 
 this acquisition and operation of the 70 dis- 
 tilleries, which enabled the accused or said 
 Distilling & Cattle Feeding Company to 
 manufacture and control the sale of 75 per 
 cent, of the distillery products of the coun- 
 try, it does not appear, nor is it alleged, that 
 the persons from whom said distilleries were 
 acquired were placed under any restraint, by 
 contract or otherwise, which prevented them 
 
164 
 
 from continuing or re-engaging in such 
 business. All other persons who chose to 
 engage therein were at liberty to do so. The 
 effort to control the production and manu- 
 facture of distillery products, by the enlarge- 
 ment and extension of business, was not an 
 attempt to monopolize trade and commerce 
 in such products within the meaning of the 
 statute, and may therefore be left out of fur- 
 ther consideration." 
 
 In U. S. vs. Trans-Missouri Freight Associa- 
 tion (58 Fed., 58), SANBORN, Circuit Judge, said 
 (p. 82)? 
 
 " A monopoly of trade embraces two es- 
 sential elements : (i) The acquisition of an 
 exclusive right to, or the exclusive control 
 of, that trade ; and (2) The exclusion of all 
 others from that right and control." 
 
 In Northern Securities Co. vs. The United 
 States (193 U. S., 197), Mr. Justice HOLMES in 
 his opinion said (p. 409) : 
 
 " I repeat, that in my opinion, there is no 
 attempt to monopolize, and what, as I have 
 said, in my judgment amounts to the same 
 thing, that there is no combination in re- 
 straint of trade, until something is done 
 with the intent to exclude strangers to the 
 combination from competing with it in some 
 part of the business which it carries on." 
 
165 
 
 In Whitwell vs. Continental Tobacco Co. 
 (125 Fed., 454), it was said, by SANBORN, Circuit 
 Judge (p. 462) : 
 
 " The Supreme Court has declared that 
 the true construction of the first section is 
 that no contract, combination, or conspiracy 
 is denounced by it unless its necessary effect 
 is to directly and substantially restrict com- 
 petition in commerce among the states. By 
 a parity of reasoning, the correct interpreta- 
 tion of the second section must be that no 
 attempt to monopolize a part of commerce 
 among the states is made illegal or punish- 
 able by the provisions of that section unless 
 the necessary effect of that attempt is to 
 directly and substantially restrict commerce 
 among the states. The acts of the defend- 
 ants had no such effect. They evidenced 
 nothing but the legitimate efforts of traders 
 to secure for themselves as large a part of 
 interstate trade as possible, while they left 
 their competitors free to do the same. It was 
 not it could not have been the purpose 
 or the effect of the second section of this 
 law to prohibit or to punish the customary 
 and universal attempts of all manufacturers, 
 merchants and traders engaged in interstate 
 commerce to monopolize a fair share of it in 
 the necessary conduct and desired enlarge- 
 ment of their trade, while their attempts 
 leave their competitors free to make success- 
 ful endeavors of the same kind." 
 
166 
 
 In National Cotton Oil Co. v. Texas (197 U. S., 
 115), the constitutionality of certain anti- 
 trust acts of the State of Texas was involved. 
 In the course of his opinion, Mr. Justice Mc- 
 KENNA said (p. 129) : 
 
 "It is enough to say that the idea of 
 monopoly is not now confined to a grant of 
 privileges. It is understood to include a 
 ' condition produced by the acts of mere in- 
 dividuals. ' Its dominant thought now is, 
 to quote another, ' the notion of exclusive- 
 ness or unity ' ; in other words, the supres- 
 sion of competition by the unification of in- 
 terest or management, or it may be through 
 agreement and concert of action. And the 
 purpose is so definitely the control of prices 
 that monopoly has been defined to be, * uni- 
 fied tactics with regard to prices/ It is the 
 power to control prices which makes the in- 
 ducement of combinations and their profit. 
 It is such power that makes it the concern 
 of the law to prohibit or limit them." 
 
 (4) We will not attempt by a minute com- 
 parison of these various definitions to reconcile 
 them. Some of them are obscured by the use 
 of general phrases which are only pertinent 
 when they are related to particular conditions. 
 A concern may by legitimate growth and expan- 
 sion and by entirely legitimate means acquire 
 
167 
 
 such a preponderance of a particular trade as to 
 be a dominating factor in that trade, but it can- 
 not be said to be a monopoly in a legal sense. 
 Therefore, " dominating a trade " as a phrase is 
 only applicable in connection with other condi- 
 tions. The same is true of the phrase " the con- 
 trol of the market." There may be a perfectly 
 legitimate control of the market for the time 
 being, and it is, therefore, not in and of itself 
 controlling. This is true of the power to 
 fix prices, as it is a power which inheres in 
 every producer to the extent of his trade 
 limited only by economic considerations. 
 "" Unification of interest or management " may 
 result from entirely legal transactions as well 
 as illegal, and it is valueless for the purposes 
 of definition without the necessary qualifica- 
 tion. It follows that these various conditions 
 are not in and of themselves controlling. There 
 must be some element or condition out of which 
 they spring, or associated with them, which im- 
 parts to them the quality of a monoply in a legal 
 sense. The clew to that element is found in the 
 statement of Judge JACKSON that it is an exclu- 
 sive control resulting from restrictions and re- 
 straints which " operate to prevent the exercise 
 
168 
 
 of a right or liberty open to the public before the 
 monopoly was secured," and the statement of 
 Judge SANBORN that it is " an exclusive right to 
 or the exclusive control of that trade " embracing 
 " the exclusion of all others from that right and 
 control." But the question still arises what con- 
 stitutes " the exclusion of all others " or " a re- 
 striction or restraint " which operates " to prevent 
 the exercise of a right or liberty open to the 
 public before the monopoly was secured." The 
 solution in part at least is found in the first section 
 of the Act ; that is an exclusion resulting from 
 contracts, combinations or conspiracies in re- 
 straint of trade such as are therein mentioned, in 
 such volume and to such a degree as to constitute 
 practically an exclusive control, is monopol- 
 ization or an attempt to monopolize. There are 
 specific contracts, combinations or conspiracies 
 which do not reach the point of monopolization. 
 There may be such contracts, combinations and 
 conspiracies which in their effect reach that 
 point. Apart from such contracts, combinations 
 and conspiracies there may be other acts con- 
 templated by the Act as constituting the act of 
 monopolization, but we cannot conceive of any 
 such acts being so contemplated unless they are 
 
169 
 
 in themselves unlawful or tortious. Hence we 
 submit that monopolization within the Act is the 
 exclusive control of a trade which is the natural 
 effect and result of a comprehensive system of 
 such contracts, combinations or conspiracies, 
 or other unlawful or tortious acts. In other 
 words, to monopolize or attempt to monopolize a 
 trade means the control of it, or the attempt to 
 control it, through the exclusion of others 
 generally from it by the means and agencies 
 which are prohibited and declared to be illegal 
 by Section i of the Act or by other means and 
 acts which are in and of themselves unlawful or 
 tortious. It is the presence of such means or 
 agencies of exclusion that constitutes a 
 monopolistic domination or control of a trade, 
 and in their absence, size, domination, and con- 
 trol of the market or prices, are not a monopoly 
 in a legal sense. It is not, therefore, a final 
 test what properties and plants a concern owns, 
 or how extensive their capacity and product are, 
 or how great the volume of its business is 
 in relation to the whole of the business or the 
 business of anybody else. 
 
 It is to be borne in mind that as this is a 
 criminal statute it is to be assumed in its con- 
 
170 
 
 struction that the Legislature was not creating 
 an offense without indicating with a fair degree 
 of definiteness what acts should constitute it. 
 To make monopolizing a criminal offense with- 
 out any standard for judging the means by 
 which the exclusion of others is effected, which 
 is essential to monopolizing, would be an in- 
 tolerable situation. The conduct of a trade 
 consists of a multitude of acts varying in 
 their ethical quality. Competition is a state 
 of war. One man may push it to the extreme 
 limits, whilst another may draw the boundary 
 line clear inside of them. Price cutting and re- 
 bating, collecting information of the trade of 
 competitors, the operation of companies under 
 other names to obviate prejudice or secure an 
 advantage, or for whatever reason, are all 
 methods of competition. Who knows where the 
 line is that separates "fairness" in these 
 methods from " unfairness ? " What legal 
 standard determines what is " fair " and what is 
 "unfair?" Lord MORRIS said in the Mogul 
 case ([1892] App. Cas., p. 51) that the question 
 of " fairness " is one that would be determined 
 by the "idiosyncrasies of individual judges," 
 and that he could see no limit to competition ex- 
 
171 
 
 cept the invasion of the legal rights of another. 
 Yet competition is one of the principal means 
 whereby one man gets the better of his fellows 
 in the struggle for trade, and appropriates to 
 himself an ever increasing share of it, even ex- 
 tending to such a dominating share of it as to 
 constitute what is called control. What legal 
 rules or standards has a man to guide him in 
 determining when his methods cross an imagin- 
 ary line between fair and unfair, so that his suc- 
 cess thereby becomes a criminal offense ? Those 
 who stand upon an Act which encourages com- 
 petition cannot complain of the extermination 
 which competition involves. 
 
 It is unnecessary to multiply instances. We 
 say that it could not have been the intention of 
 the legislature to constitute such matters ele- 
 ments in the criminal offense of monopolizing a 
 trade. Contracts in restraint of trade are governed 
 and defined by fixed legal standards, as are com- 
 binations and conspiracies in restraint of trade. 
 There is no uncertainty in denouncing the con- 
 trol of a business which results from such con- 
 tracts, combinations and conspiracies as a criminal 
 offense, because a man would then know whether 
 his acts and transactions constituted the offense 
 
172 
 
 prescribed by the Act. The same is true of any 
 other unlawful or tortious acts of exclusion. But 
 unfair methods of competition such as have been 
 indicated, and other similar methods of business, 
 present moral rather than legal problems in the 
 solution of which judges and juries would differ, 
 and no man could know whether his methods of 
 business were threatening him with criminal 
 consequences or not. This is what we mean by 
 saying that the Act should be construed to con- 
 stitute an offense consisting of elements gov- 
 erned by legal standards, which is the case if the 
 monopolization which is denounced is the con- 
 trol of business accomplished by the means de- 
 clared to be illegal by the first section of the 
 Act or by means otherwise unlawful, and 
 that it should not be construed to constitute 
 the offense of elements that are outside of 
 the domain of legal standards, and so vague, in- 
 definite and uncertain that whether a crime had 
 been committed or not would depend upon the 
 idiosyncrasies of judges and juries. 
 
 The case of Swift vs. U. S. (196 U. S., 375) 
 is pertinent in connection with this phase of 
 the case. The defendants named in the bill 
 were a number of corporations, firms and indi- 
 
173 
 
 viduals engaged in the business of buying live 
 stock, slaughtering it, and converting it into 
 fresh meats, and selling the fresh meats through- 
 the United States, controlling nearly the whole 
 trade. It was alleged that they had combined 
 to monopolize the business. It was not charged 
 or contended that the extent of the business 
 of the defendants was in and of itself a monopoly. 
 It was charged that monopolization or an attempt 
 to monopolize resulted from certain specific acts 
 or courses of conduct of the combination, such 
 as refraining from bidding against each other in 
 purchasing cattle except perfunctorily ; bidding 
 up prices for a few days higher than the state of 
 the trade would warrant to induce stock owners 
 in other States to make large shipments ; the ar- 
 bitrary raising and lowering of prices from time 
 to time ; the collusive restriction of the shipments 
 of meat ; the imposition of penalties upon their 
 customers for deviations from certain rules ; the 
 keeping of a black list of customers who de- 
 parted from those rnles ; and obtaining rebates 
 from railroad companies. The case in its mon- 
 opoly aspect turned on the combination for those 
 purposes, and it was the use of the specific means 
 alleged which was enjoined, and not the com- 
 bination for any other purposes. 
 
174 
 
 We therefore insist that to monopolize, or at- 
 tempt to monopolize, under the Act of 1890, is 
 not established by showing that a concern con- 
 trols the manufacture and sale of the bulk of 
 any particular article, or that it dominates the 
 trade in that article, or controls the price thereof 
 in so far as it deals in the article, in the absence 
 of an exclusive control of the character indicated. 
 
 (4) Having attempted to define a monopoly it 
 is now to be remarked that monopolization 
 within the Act is confined to the monopolization 
 of interstate and foreign commerce by its ex- 
 press terms, and by the fact that production and 
 manufacture are not interstate commerce or 
 within the jurisdiction of congress. Interstate 
 commerce does not begin until there is some 
 interstate transaction of sale or interstate 
 movement for purposes of sale. In the Swift 
 case (196 U. S., p. 397) it was said: 
 
 " Therefore the case is not like United 
 States v. E. C. Knight Co., 156 U. S., i, 
 where the subject matter of the combina- 
 tion was manufacture and the direct object 
 monopoly of manufacture within a State. 
 However likely monopoly of commerce 
 among the states in the article manu- 
 factured was to follow from the agreement 
 
175 
 
 it was not a necessary consequence nor a 
 primary end. Here the subject matter is 
 sales and the very point of the combination 
 is to restrain and monopolize commerce 
 among the states in respect of such sales. 
 The two cases are near to each other, as 
 sooner or later always must happen where 
 lines are to be drawn, but the line between 
 them is distinct." 
 
 The distinction is between a monopoly in the 
 manufacture of an article and a monopoly in its 
 sale. The extent to which a corporation or com- 
 bination is engaged in the production and manu- 
 facture of an article is one thing ; its interstate 
 commerce is an entirely different thing. It may 
 be a producing and manufacturing monopoly 
 and yet not be a monopoly with respect to inter- 
 state commerce within the meaning of the Act of 
 1890. It is its conduct with respect to interstate 
 commerce that determines whether it is monop- 
 olizing within the Act. It is only when it markets 
 its product throughout the states that it comes 
 within the province of that Act, and therefore 
 the question must always be, in determining 
 whether there is monopolizing within the Act, 
 not the extent of its manufacturing capacity 
 and production, but whether in marketing its 
 
176 
 
 products throughout the states it is monopolizing 
 or attempting to monopolize that trade. If 
 competitors generally are not excluded from the 
 trade by contracts, combinations or conspiracies 
 in restraint of trade or other unlawful 
 acts having that as their purpose and 
 effective in its accomplishment there is no 
 monopolization. The question here is therefore 
 whether by such means refiners and dealers gen- 
 erally are now being excluded from the markets 
 of the various states or foreign countries. 
 
 (5) We have specified the means which 
 are charged as the means by which the 
 alleged monopolization is effected. They may 
 be condensed as follows : 
 
 (i) Agreement with Tide- Water Company, 
 dated October 9th, 1883 ; (2) contracts with 
 Pennsylvania Railroad Co. of August 22nd, 
 1884 > (3) control of pipe lines and unfair prac- 
 tices against competing lines ; (4) particular 
 contracts in restraint of trade ; (5) combination 
 with railroads to obtain discriminations ; (6) 
 methods of selling lubricating oils to railroads ; 
 (7) unfair methods of competition ; (8) and di- 
 vision of territory. 
 
177 
 
 All of these matters are covered by the Brief 
 on the Facts and the Summary of Facts con- 
 tained in this brief, to which we refer to avoid 
 repetition, simply insisting here that it is estab- 
 lished that there is no monopolization or attempt 
 to monopolize. 
 
 VII. 
 
 The only relief, if any, that can be 
 granted is to enjoin specific acts or 
 methods in restraint of interstate trade, 
 or tending to its monopolization if any 
 such are found to exist. 
 
 (i) We have already shown that it is not the 
 intent of the Act, or within the power of Con- 
 gress, to limit the mannfacturing properties or 
 plants that a corporation or individual may ac- 
 quire or create ; and that therefore, the common 
 ownership and use of the Standard properties 
 may not be directly or indirectly disturbed. We 
 have also shown that the intrastate sale and 
 marketing of the products is not within the Act 
 or the jurisdiction of Congress. The only sub- 
 ject within the Act is interstate and foreign com- 
 
178 
 
 merce ; that is, the interstate and international 
 marketing and sale of the products. If it should 
 be found by the Court that the Defendants, 
 by the employment of any particular means, 
 are monopolizing or attempting to monop- 
 olize that particular trade then, following 
 the precedent of Swift vs. the United States 
 (196 U. S., 375), the proper relief is to enjoin 
 those means. There were alleged in that case 
 certain acts or courses of conduct intended to 
 monopolize the trade. The injunction granted 
 by the Circuit Court restrained the defend- 
 ants from combining to restrain interstate trade 
 by doing any of the acts or pursuing any 
 of the courses of conduct specifically alleged^ 
 "or by any other method or device ", and also 
 from combining together to monopolize or at- 
 tempting to monopolize the interstate trade 
 by means of rebates from railroad companies. 
 The Court said as to the nature of the action 
 (P- 394) : 
 
 " To sum up the bill more shortly, the 
 charge is, a combination of a dominant pro- 
 portion of the dealers in fresh meat through- 
 out the United States not to bid against 
 each other in the live stock markets of the 
 different States ; to bid up prices for a few 
 
179 
 
 days in order to induce the cattlemen to 
 send their stock to the stock yards ; to fix 
 prices at which they will sell, and to that 
 end to restrict shipments of meat when 
 necessary ; to establish a uniform rule of 
 credit to dealers, and to keep a black-list ; 
 to make uniform and improper charges for 
 cartage, and finally, to get less than lawful 
 rates from the railroads to the exclusion of 
 competitors." 
 
 After considering the reasons for holding the 
 scheme as a whole to be within the reach of the 
 Act of 1890 the Court said (p. 398) ; 
 
 " For the foregoing reasons, we are of 
 opinion that the carrying out of the scheme 
 alleged, by the means set forth, properly may 
 be enjoined, and that the bill cannot be dis- 
 missed." 
 
 The Court then reviewed those means separ- 
 ately and held that each of them as a part of a 
 connected scheme was sufficiently brought by 
 the allegations within the provisions of the Act 
 of 1890 to be specifically enjoined ; but the 
 general words of the injunction " or by any other 
 method or device the purpose and effect of which 
 is to restrain commerce as aforesaid" were 
 stricken out, the Court saying (P. 401) : 
 
180 
 
 " The defendants ought to be informed as 
 accurately as the case permits what they 
 are forbidden to do. Specific devices are 
 mentioned in the bill, and they stand pro- 
 hibited. The words quoted are a sweeping 
 injunction to obey the law, and are open to 
 the objection which we stated at the be- 
 ginning, that it was our duty to avoid, to 
 the same end of definiteness so far as ob- 
 tainable, the words " as charged in the bill" 
 should be inserted between " dealers in such 
 meats '' and " the effect of which rules," and 
 two lines lower, as to charges for cartage, 
 the same words should be inserted between 
 " dealers and consumers " and "the effect 
 of which." 
 
 Further, the Court said (p. 402) : 
 
 " It only remains to add that the foregoing 
 question does not apply to the earlier sec- 
 tions which charge direct restraints of trade 
 within the decisions of the Court, and that 
 criticism of the decree, as if it ran generally 
 against combinations in restraint of trade, 
 or to monopolize trade, ceases to have any 
 force when the clause against " any other 
 method or device " is stricken out. So 
 modified, it restrains such combinations only 
 to the extent of certain specified devices, 
 which the defendants are alleged to have 
 used and intend to continue to use." 
 
 In Addytone Pipe & Steel Co. vs. U. S. (175 
 U. S., 211), the Court said (p. 247) : 
 
181 
 
 " The views above expressed lead gener- 
 ally to an affirmance of the judgment of 
 the Court of Appeals. In one aspect, how- 
 ever, that judgment is too broad in its terms 
 the injunction is too absolute in its direc- 
 tions . . . as it may be construed as 
 applying equally to commerce wholly within 
 a State as well as to that which is interstate 
 or international only. This was probably 
 an inadvertence merely. Although the 
 jurisdiction of Congress over commerce 
 among the States is full and complete, it is 
 not questioned that it has none over that 
 which is wholly within a State, and, there- 
 fore, none over combinations or agreements 
 so far as they relate to a restraint of such 
 trade or commerce. It does not acquire any 
 jurisdiction over that part of a combination 
 or agreement which relates to commerce 
 wholly within a State, by reason of the fact 
 that the combination also covers and regu- 
 lates commerce which is interstate. The 
 latter it can regulate, while the former is 
 subject alone to the jurisdiction of the 
 State. ... To the extent that the 
 present decree includes in its scope the en- 
 joining of defendants thus situated from 
 combining in regard to contracts for selling 
 pipe in their own State, it is modified and 
 limited to that portion of the combination or 
 agreement which is interstate in its charac- 
 ter." 
 
182 
 
 The paragraph of the opinion immediately 
 preceding the quotation we have just given is as 
 follows (p. 246) : 
 
 " It is almost needless to add that we do 
 not hold that every private enterprise which 
 may be carried on chiefly or in part by 
 means of interstate shipments is, therefore, 
 to be regarded as so related to interstate 
 commerce as to come within the regulating 
 power of Congress. Such enterprises may 
 be of the same nature as the manufacturing 
 of refined sugar in the Knight case, that 
 is, the parties may be engaged as manufac- 
 turers of a commodity which they thereafter 
 intend at some time to sell, and possibly to 
 sell in another State ; but such sale we have 
 already held is an incident to and not the 
 direct result of the manufacture, and so is 
 not a regulation of, or an illegal interfer- 
 ence with, interstate commerce. That prin- 
 ciple is not affected by anything herein 
 decided." 
 
 (2) These cases clearly furnish the principle 
 which should govern in the disposition of this 
 case. A combination is alleged, followed by 
 the allegation of specific acts and courses of 
 conduct which it is alleged restrain and monop- 
 olize interstate commerce in oil. The only 
 questions that can be raised are therefore (i) 
 Is there a scheme to monopolize interstate trade 
 
183 
 
 in oil by the specific means alleged ; (2) 
 are the means adequate ; and (3) if the scheme 
 exists, which of the particular means alleged 
 are now being employed? If any of those 
 means are found in use the relief to be 
 given is to enjoin the monopolization or 
 attempt to monopolize the interstate commerce 
 in oil by those specific means. The jurisdiction 
 of the Court extends that far and no further. It 
 does not extend to the ownership of the refiner- 
 ies because under the Knight case production 
 is not within the Act or subject to the 
 jurisdiction of Congress. It does not extend to 
 the intra-state disposition of the product because 
 that is domestic commerce not within the Act 
 or subject to the jurisdiction of Congress. 
 And under the Swift case, even if a combina- 
 tion exists which is a monopolization of or an 
 attempt to monopolize a particular trade, it can- 
 not be generally enjoined, but only the acts and 
 devices to effect the monopolization which are 
 specifically alleged, as they are in the bill before 
 the Court, can be enjoined. The case is precisely 
 within and governed by the principle of the 
 Swift case as to the relief that can be adminis- 
 tered. 
 
184 
 
 In this regard the case is entirely different 
 from the Northern Securities case. That was a 
 combination for the control of two interstate rail- 
 way systems engaged in interstate transporta- 
 tion. Their business was exclusively transpor- 
 tation, and was therefore exclusively commerce as 
 distinguished from production. The dominating 
 element of their business was interstate transpor- 
 tation, therefore interstate commerce. The 
 control of the combination was reached by 
 the prohibition of the voting power of the 
 holding company. The control was the only 
 device alleged as the means whereby in- 
 terstate transportation was restrained, and the 
 decree necessarily was directed at that control. 
 
 POINT VIII. 
 
 There is no basis in the proofs for any 
 decree affecting the international trade of 
 the Defendants* 
 
 It appears from the proofs that the Standard 
 Oil Co. (of New Jersey) owns the shares in 
 whole or in part of many different foreign com- 
 
185 
 
 panics operating exclusively in foreign countries, 
 none of which, with a single exception, is 
 a party to this proceeding. The only exception 
 is the Anglo-American Oil Co., Ltd., and nothing 
 is shown as to its business or as to the busi- 
 ness of the other foreign companies. All that 
 does appear is that about 60% of the refined 
 oil is marketed in foreign countries. The 
 markets in foreign countries are free and open 
 to everyone. No refiner in this country is 
 restricted in any way, or by any means, from 
 selling all the oil in those countries which he 
 can manufacture, and intercourse with those 
 countries is just as open to them as to the 
 Standard. There is no evidence that they are 
 by any devices or acts of the Standard pre- 
 vented or restricted from access to those markets. 
 The competition there is with all the foreign 
 production, and the conditions which exist there 
 govern the business which is done. We fail to 
 see any ground for disturbing the marketing 
 facilities which have been established through- 
 out the world by means of the foreign companies. 
 It has been a work of enormous labor and ex- 
 pense to establish those facilities and they secure 
 
186 
 
 for this country a vast trade it would not other- 
 wise have to its great advantage and that of the 
 people. 
 
 POINT IX. 
 
 There is no basis in the proofs for any 
 decree severing the ownership of the pipe 
 line companies. 
 
 As we have already said, these companies fall 
 into two classes. There are the companies which 
 were organized by the owners of the Standard 
 properties to provide purely private pipe lines 
 for the purposes of their own business. They 
 were built to reach the oil fields and provide a 
 regular and adequate supply of crude for the 
 refineries. There is no principle upon which 
 their ownership should be severed, particu- 
 larly as they are an indispensable adjunct of the 
 refineries. No one would dream now of building 
 a refinery on a large scale without a pipe line 
 system to reach the oil fields for the crude 
 supply. To separate them in any such case 
 would be to amputate an essential part of the re- 
 fining plants. 
 
187 
 
 The other class consists of the common carrier 
 pipe lines. There is no evidence or principle jus- 
 tifying their severance. They are, in fact, by the 
 nature of the business only nominally common 
 carrier lines. The development of the business 
 has been along the line of every refinery 
 having its own associated pipe line system, 
 and that has become an unalterable condition of 
 the business. That is why the Standard's pipe 
 lines are not in fact common carrier lines, why 
 they are not used as such. In the absence of 
 any demand or need for their use by others 
 there is absolutely no basis for a severance of 
 their ownership from that of the refineries. 
 
 No question is or can be raised as to the cor- 
 porate power of the Standard Oil Company (of 
 New Jersey) to own and hold the stocks of these 
 companies. 
 
188 
 
 X. 
 
 There is no basis in the proofs for any 
 decree respecting the defendants engaged 
 in the natural gas business or the owner- 
 ship of the stocks or any of them by the 
 Standard Oil Co. (of New Jersey). 
 
 There is no evidence affecting these compa- 
 nies whatsoever. They are not engaged in the 
 oil business, and it is only the oil business 
 which is involved in this proceeding either by 
 the allegations of the bill or the proofs. They 
 are engaged in a separate and distinct business, 
 which is the supply of natural gas to particular 
 communities. The Standard Oil Co. (of New 
 Jersey), in so far as it owns the stocks of any of 
 them, is authorized by its charter to do so, and 
 its right to hold them is not challenged by any 
 evidence in the case. 
 
 JOHN G. JOHNSON, 
 JOHN G. MILBURN, 
 
 Of Counsel for the Defendant Standard 
 Oil Company and others. 
 
 [2032] 
 

 
 
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