176 GILBERT HOLLAND MONTAGUE 



Beginning in 1871, at the Clarion river, remarkable dis- 

 coveries of petroleum had been made throughout Butler and 

 Clarion counties, in the region extending five miles beyond 

 Antwerp, and southwestward a distance of fifteen miles to 

 Millerstown and Greece City. "The development south- 

 ward," says the editor of the Oil City Derrick, "brought about 

 conditions through which some of the most important rail- 

 roads of the country might be deprived of a share of the oil- 

 carrying trade. The Pennsylvania railroad, however, was 

 not affected by the transfer of activities from the Venango 

 region to that of Butler and Clarion counties. The northern 

 railway lines — namely, the Erie and New York Central — 

 were naturally affected by the transfer of operations to dis- 

 tant fields, which they could not reach with their existing con- 

 nections. The first named road was materially aided by the 

 gathering lines of the Pennsylvania Transportation company, 

 operated by Henry Harley; but the New York Central and 

 its connections were left without petroleum feeders of any 

 description." As usual in new developments of territory, 

 the increase in production due to the large capacity of the 

 wells, the overcapacity of the pipe lines in the older oil fields, 

 and the overproduction of refining plants which had taken 

 place in the last two years — all these had conspired to make 

 the transportation and refining of oil unremunerative through- 

 out the petroleum country, and especially unprofitable at 

 Cleveland. 



To remedy this situation, a combination of the railroads 

 and certain refiners was planned. "It had its inception," to 

 quote again the editor of the Oil City Derrick, "with certain 

 Philadelphia and Pittsburg refiners, with an agreement for 

 co-operation with certain Cleveland refiners. But philosoph- 

 ical minds, viewing the subject from this distance, are agreed 

 that it had its origin, as a matter of fact, with the railroad 

 interests rather than with the oil interests." The form which 

 this combination took was a contract between the railroads 

 and certain refiners of Pittsburg, Philadelphia, and Cleveland 

 organized into the South Improvement company. 



By an act of the Pennsylvania legislature on May 1, 1871, 

 the South Improvement company had been created and vested 



