this account, notwithstanding the narrowness of the policy of these managers, and in spite of the fact that they have been outwitted by the managers of the competing trunk-lines in almost every direct contest, still they have paid the full earnings of the road to the shareholders, in large dividends, and thus they have maintained a much higher market value for their stock than any of their more energetic competitors; while the fortunes of these individual managers, having been in the main more legitimately made, through their interest in the road as shareholders, are therefore not comparable in bulk to those that the managers of the other lines have amassed.

The Pennsylvania Railroad management was a different thing. By the formation of a number of parasitic corporations and the alliance of the managers with them for the abstraction of earnings, they distributed their illicit profits and, by this distribution, diffused the sum of these among a considerable number. Their illicit fortunes, therefore, being thus distributed, did not amount, in the particular case of any one of these managers, to more than ten or twelve millions of dollars.

The characteristics of the New York Central Railway management were that those in control had fewer associates for division of diverted profits. The managers skilfully linked roads together and formed a trunk-line; depressed the values of contributing roads; seized the ownership of these roads and converted them into parasites for wholesale diversion,

always, however, as strictly as possible under the forms of law. The illicit profits from all sources flowed into one reservoir and made the bulk of accumulation, in the instance of the Vanderbilt management, the most enormous individual accumulation which this country has ever witnessed.

The management of the Erie Railway, again, was different from any of the others; for with all of the others, as I have said, there was a careful compliance with the forms of law. These managers got possession of the road, not with the consent or wishes of the owners, but by but by a trick; and they thereupon engaged in a process, of what Mr. Adams calls "commercial freebooting." They manipulated legislatures, and, with the assistance of two New York judges, to whose courts they referred the owners of the road and the outraged public, they maintained their possession and control; they proceeded to lay under tribute the whole community and every public and private interest within their reach. They made wars of the most destructive competition with the competing trunk-lines. They illustrated the anomaly of a bankrupt road, in the possession of "skilful robbers," that was stronger for the purposes of diversion than were the solvent roads. The managers of the bankrupt road acknowledged allegiance to no one, and rendered no account to shareholders, but at times appropriated every thing; while the managers of the solvent roads were under the necessity of paying some part at least of their revenues to

meet the interest on the bonded indebtedness and to make moderate dividends to the shareholders. Even when this road was finally wrested from its managers, the surrender was made by them the occasion of a gigantic manipulation upon the market in Erie shares, to the immense profit of the managers and to the corresponding loss of the public. Although the power thus used under the corporate structure was enormous, these men took desperate chances, and their accumulations therefore are difficult even to estimate.

It will thus be seen that the managers of each of these roads, except the Baltimore and Ohio, have, although with a different use of the parasite, accomplished substantially the same end-viz., the secret diversion of profits from the owners of the roads to themselves. The managers of each of these roads, including the Baltimore and Ohio, have, although with a different use of the corporate power, accomplished the like purpose of steadily pushing the aggressive interest of the railway to the sacrifice of the political right of the community.

Until about 1870 the profits of the parasite on each of the separate railways were restricted by the competition from similar parasites upon the competing lines. The projectors of the "Standard Oil Trust" elaborated this simpler condition. They erected a structure by which they coupled all of the secret interests of the managers of the several trunklines, so far as their interests referred to the shipment

of petroleum. They thus made a basis for division of the profits of this product between one great parasite and the managers of the different railways. By this device all competition which formerly existed between the parasites of the different trunk-lines was overcome through consolidation. Nothing less than this would give such exclusive control as would throttle all of the competition. From this design the "Standard Oil Trust" came into being. The growth was thus from the simple parasite to the complex parasite. This involved the seizure of a whole industry. The petroleum industry afforded a peculiar opportunity for this scheme. The production of oil was confined for a long time to a limited area, principally within the State of Pennsylvania. It was thus susceptible of being seized and held in exclusion. What added to the opportunity for monopoly was the uncontrolled rivalry which prevailed among the producers of oil themselves a rivalry which always characterizes a mining field. The producers were stimulated to excessive competition in the hope of large discovery. The exclusive control of the carrying of their product by means of a pipeline, the alliance of this line with the railway managers, and a monopoly held by the "Trust," rendered these producers an easy prey to any exactions which this monopoly might choose to make. Thus a whole industry was seized. This "Trust," standing between the producer and the consumer, and through alliance with the railway managers control

ling the only means of communication, proceeded to exact from both producer and consumer the largest possible margin and to hold the industry in its grasp. Involved in this seizure, also, there was the taking from the railways in rebates a large part of their legitimate earnings. These were paid to the complex parasite, thereafter to be divided between the organizers of the parasite and the managers of the railways.

The organization of the "Standard Oil Trust" itself has been a gradual growth. Viewing it from the beginning, its capitalization has to a comparatively small extent been made with money-to a very large extent with power. The actual amount of money employed as the nucleus, considering its present magnitude, was very moderate.1 The actual amount which it now has in capital and plant is nearly all derived from the past employment of its power. The real capitalization, therefore, consists in more than fifty corporate structures, whose franchises are derived from the different States, and in the power employed by means of the control of these structures in the unity of the "Trust." The wealth of the "Trust" is estimated upon the market by its dividend-paying capacity.

1 Mr. Hudson, in his work, "The Railways and the Republic" (New York, 1886, p. 68), states the amount of the first actual investment as $300,000. In the testimony of H. M. Flagler, one of the officers of the "Standard Oil Trust," given before the Committee on Manufactures of the House of Representatives, April 27, 1888, it is stated that the first corporation from which the “Trust” eventually grew—the Standard Oil Company of Ohio-was organized in 1870, and was capitalized at $1,000,000.