RISE OF THE STANDARD OIL COMPANY 177 



with all the powers conferred by the act of April 7, 1870, upon 

 the Pennsylvania company. The powers of the company in- 

 cluded authority "to construct and operate any work or 

 works, public or private, designed to include, increase, facil- 

 itate, or develop trade, travel, or the transportation of freight, 

 live stock, passengers, or any traffic by land or water, from or 

 to any part of the United States." Of the 2,000 shares of this 

 company, 900 were owned by Messrs. H. M. Flagler, O. H. 

 Payne, William Rockefeller, H. Bostwick, and J. D. Rocke- 

 feller, who later were to become prominent in the Standard 

 Oil company. 



On January 18, 1872, the South Improvement company 

 effected the desired combination by completing contracts with 

 the Pennsylvania, the New York Central, and the Erie rail- 

 roads. According to the contracts the South Improvement 

 company agreed to ship 45 per cent of all the oil transported 

 by it over the Pennsylvania railroad, and to divide the re- 

 mainder equally between the Erie and the New York Central 

 railroads, to furnish suitable tankage facilities for shipping 

 petroleum and receiving it at its destination, and to keep 

 records of the amount of petroleum and its products shipped 

 over the railroads both by itself and by other parties. The 

 railroads in return agreed to allow the South Improvement 

 company rebates on all petroleum and its products carried 

 by them, to charge all other parties not less than the full rates 

 specified in the contract, to furnish to the South Improve- 

 ment company way bills of all petroleum or its product, trans- 

 ported over their lines by any parties whatsoever, and, finally, 

 "at all times to co-operate, as far as it legally may, with the 

 party hereto of the first part, to maintain the business of the 

 party hereto of the first part against loss or injury by compe- 

 tition, to the end that the party hereto of the first part may 

 keep up a remunerative, and so a full and regular business, 

 and to that end shall lower or raise the gross rates of trans- 

 portation over its railroads and connections, as far as it legally 

 may, for such times and to such extent as may be necessary 

 to overcome such competition." The aim of the railroads, 

 as avowed in the preamble, was plainly an increase in traffic; 

 "whereas the magnitude and extent of the business and opera- 



Vol. 3—13 r 



