The details concerning this act of generalship are fairly well known. The South Improvement Company is a corporation that necessarily bulks large in the history of the Standard Oil. Mr. Rockefeller and his associates have always disclaimed the parentage of this organization. They assert--and their assertion is doubtless true--that the only responsible begetters were Thomas A. Scott, President of the Pennsylvania Railroad, and certain refineries in Pittsburgh and Philadelphia which, though they were afterwards absorbed by the Standard, were at that time their competitors. These refiners and the Pennsylvania, over which the Standard Oil then was making no shipments, thus represented a group, composed of railroads and refiners, which was antagonistic to the Rockefeller interests. The South Improvement Company was an association of refiners with which the railroads, chiefly the Pennsylvania, the New York Central, and the Erie, made exclusive contracts for shipping oil. Under these contracts rates to the seaboard were to be generally raised, though the members of the South Improvement Company were to receive liberal rebates. The refiners of Cleveland and Pittsburgh were to get lower rates than the refiners located in the oil regions. But the clause in these contracts that caused the greatest amazement and indignation was one which gave the inside group rebates on every barrel of oil shipped by its competitors.
It would be difficult to imagine any transaction more wicked than these contracts. Carried into execution they inevitably meant the extinction of every refiner who had not been admitted into the inside ring. Of the two thousand shares of the South Improvement Company, the gentlemen who were at that time most conspicuously identified with the Standard Oil Company subscribed to five hundred and forty. Mr. Rockefeller has always protested that he did not favor the scheme and that he became a party to it simply because he could not afford to antagonize the powerful Pennsylvania Railroad, which had originated it. When the details became public property, a wave of indignation swept from the Atlantic to the Pacific; the oil regions, which would have been the heaviest sufferers, shut down their wells and so cut off the supply of crude oil; the New York newspapers started a "crusade" against the South Improvement group and Congress ordered an investigation. So fiercely was the public wrath aroused that the railroads ran to cover, abrogated the contracts, signed an agreement promising never more to grant rebates to any one, while the Pennsylvania Legislature repealed the charter of the South Improvement Company. This particular scheme, therefore, never came to maturity. Before the South Improvement Company ended its corporate existence, however, a great change had taken place in the oil situation. Practically all the refineries in Cleveland had passed into the control of the Standard Oil Company. The Standard has always denied that there was any connection between the purchase of these great refineries and the organization of the South Improvement Company. But there is much evidence sustaining a contrary view, for many of these refiners afterward went on the witness stand and told circumstantial stories, all of which made precisely the same point. This was that the Standard men had come to them, shown the contracts which had been made by the South Improvement Company, and argued that, under these new conditions, the refineries left outside the combination could not long survive. The Standard's rivals were therefore urged to "come in," to take Standard stock in return for their refineries, or, if they preferred, to sell outright. Practically all saw the force in this argument and sold--in most cases taking cash.
The acquisition of these Cleveland refineries made inevitable the Rockefeller conquest of the oil industry. Up to that time the Standard had refined about fifteen hundred barrels a day, and now suddenly its capacity jumped to more than twelve thousand barrels.