A P P E N D I X

« NUMBER 38

TESTIMONY OF HENRY M. FLAGLER IN REGARD TO THE TIDEWATER CONTEST

[Proceedings in Relation to Trusts, House of Representatives, 1888. Report Number 3,112, page 783.]

Q. Now you can make your statement.

A. I want to say this: The Tidewater Pipe Line was the first line built to the seaboard, and it had a connection with the Reading Railroad, by which the railroad and the line jointly undertook to do business. We had several discussions of pipe-lines of the future with the representatives of the Tidewater Pipe Line, and would have had no difficulty whatever in making satisfactory arrangements with them, which would have removed all unnecessary competition, but the New York Central, the Erie road, and the Pennsylvania Central said to us: "Gentlemen, we don't want you to make any alliance of any formal nature with the Tidewater Pipe Line." They added: "We will protect you in the matter of rates as against any competition furnished by the Reading and Tidewater Pipe Line." I replied to that: "I have never seen a contest begun of this kind but what there was an end to it. Now, we can make a satisfactory arrangement with the Tidewater Pipe Line and avoid all this contest. It is not necessary for you to throw away any money. We are not seekers after low rates. We have done our business by you, and are willing to continue, but only upon one single, solitary condition: we would prefer not to have this contest; it is better that the Tidewater and Reading Railroad should be recognised." The reply was: "We never will recognise them as carriers of oil."

Q. That was the reply of these three trunk lines?

A . Yes, sir. I said: "Gentlemen, the other thing is of a great deal more importance than the rates. The rates are short-lived affairs." Now, I will make this explanation in justice to ourselves, in reply to the remark you made of our contest with the Tidewater Line. We had no contest. It was simply a contest of the transportation lines, and we, like fools, allowed ourselves, instead of making arrangements with the Tidewater Line, to say to the trunk lines: "Very well, then, we will stick to you and leave you to fight out this battle." They fought it for a year or two, and you know how it ended.

Q. Three or four years, was it not?

A. I thought it was two years.

Q. Then I understand you to say that all that struggle, and the low rate that the trunk line charged at the time the competition with the Tidewater and Reading came into existence, was brought about by the trunk lines themselves?

A. It was a struggle on the part of the trunk lines to hold the entire oil business, and they avowed it to me not once, but many times, that it was their firm intention never to recognise the Tidewater to the seaboard.

Q. And during that struggle they actually carried it at fifteen cents a barrel?

A. I should have said twenty or twenty-five cents. I knew it was a ridiculously low rate.

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