Tarbell narrates an uprising by oil producers in 1872, against “TheStandard Oil Company” owing to discriminatory shipping rates by therailroads. Majority of the oil producers from west-centralPennsylvania were optimistic of the benefits they would receive fromthe oil business. However, they faced a major setback in theirbusiness endeavors. John D. Rockefeller was a refiner in thebusiness. Tarbell notes that he was recognized as a mercilessbargainer. His competitors were suspicious that he was awardedfavorable shipping rates from railroads. But due to intensecompetition among different railroads, Rockefeller’s competitorswere able to get special shipping rates as well. However, Rockefellerstill managed to get the best rates.
It was expected that the railroads world offer the same rates to allshippers without discrimination. But that was not the case inCleveland. On the other hand, in Pennsylvania the railroad was morefavorable and even gave discounts to the regions shippers, who wereRockefeller’s “Standard Oil” major rivals. As a result,competition between Rockefeller and rivals affected oil prices, whichwere declining. The declines benefited common Americans purchasingthe oil, but meant bad business for the major dealers. This resultedin the formation of a secret combination, comprising of refiners andshippers. The combination aimed at convincing all the railroadsinvolved in shipping oil to offer the organization special rebates,and higher rates on competitors. If the deal went through, it wouldbe impossible for shippers and refiners not part of the combinationto compete. The combination would eventually dominate by limitingoutput to real demand, making it possible to maintain high prices.
The railroads accepted the deal, which would reduce theircompetition and ensure their rates remained high. The secretcombination had to operate under a charter, which they managed to buycalled the “South Improvement Company”. The company’s capacityincreased in a period of months from just 1500 barrels to 10,000barrels daily. Such success had been actualized via Rockefeller’smain business strategy of silence. However a former enemy of therailway directors was left out of the deal, and as revenge he let outthe secret. Oil producers working independently realized that theirfreight rates had been increased. The media began to publish thatindividuals included in the “South Improvement Company” paidlower freight rates, resulting in the declaration of the company as aconspiracy.
Americans responded to the conspiracy in anger resulting in crowdedmeetings at “Titusville, Pennsylvanian and then at Oil City,Pennsylvania (Tarbell 248).” The anger was war-like with bannersadvocating for the secret combination to be brought down. Also, aunion was formed called the “Petroleum Producers Union” (Tarbell248). The drilling of oil wells was temporarily halted, no productionwould take place on Sundays, and oil would not be sold to any memberof the combination. In addition, there was widespread boycotting ofrailroads engaged in the conspiracy. It was suggested that newrailroads would be constructed and operated by the union. All the oilproducers that had been left out were determined to destroy the“South Improvement Company”.
Congressional investigation on the issue concluded that thecombination intended to push out of business al refiners, shippersand oil producers that were not included in forming the company.Railroads were on the other hand accused of discrimination. Thismarked “The Oil War of 1872” that was a protest againstinequality.
Tarbell, Ida M. The Oil War of 1872. Chapter III of the History ofthe Standard Oil Company. McClure’s Magazine (1903):248-260.