South Improvement Company Analysis

4505 Words 19 Pages
Register to read the introduction… On November 30, 1871, Peter H. Watson, an official of the Lake Shore Railroad, met with Rockefeller in New York and presented a shady scheme designed to create an alliance between the three most powerful railroads – "the Pennsylvania, the New York Central, and the Erie-and a handful of refiners, notably Standard Oil." To implement this plan, a charter was obtained for a South Improvement Company, which was a misleading name; the three railroads and the refiners were all unofficially brought together under this name. Under the terms of this pact, the railroad companies would increase their rates for every customer, but offer substantial rebates to the members of the South Improvement Company. A member could get "up to 50 percent off crude-and refined-oil shipments." Apart from the rebates on all oil products shipped by the members, the railroads would also pay rebates to the members for every barrel shipped by their competitors. Rockefeller and the other members would also receive comprehensive information about oil shipped by their competitors – this would prove invaluable in underselling them. The members of the South Improvement Company were sworn to secrecy, because this was "an astonishing piece of knavery, grand-scale collusion such as American industry had never witnessed." Two thousand shares of the South Improvement Company were distributed, "giving Mr. Rockefeller and his associates 900 shares in all." W. G. Warden, the owner of 475 shares of the South Improvement Company commented that "they [the railroads] did not want to give us a rebate unless it was with the understanding that all the refineries would be brought into the arrangement and placed upon the same level." Warden was questioned most likely because he held considerably more shares than Rockefeller individually; Rockefeller, however, had control of more shares …show more content…
He called him a ‘robber baron', and was very frank when putting his own opinion onto Rockefeller. His book, Robber Barons, contains testimonies of refiners claiming to be unfairly treated by Rockefeller. "They [Standard Oil] paid me $15,000 for what cost me $41,000" claims an anonymous source. Josephson's main point is Rockefeller's philosophy of destroying all competition and buying their capital. He goes into detail as to the amount of barrels produced or shipped, and the rates they were shipped at. He describes Standard Oil's willingness to literally damage enemy capital in order to force them into

Related Documents