The History of the Standard Oil Company/Volume 1/Appendix/Number 22
NUMBER 22 (See page 139)
AGREEMENT OF 1874 BETWEEN THE RAILROADS AND PIPE-LINES
[Report of the Special Committee on Railroads, New York Assembly, 1879. Volume III, pages 3431-3437]
Memorandum of agreement entered into this fourth day of September a.d. 1874, by and between the following parties, viz.:
First.—J. J. Vandergrift, G. V. Forman, and John Pitcairn, Jr., partners themselves, and agreeing that they have authority to represent all other partners in the association trading under the name of the United Pipe Lines, and holding themselves individually responsible to the other parties hereto that they have such authority.
Second.—The Union Pipe Company by Charles P. Hatch, manager.
Third.—The Antwerp Pipe Company and the Oil City Pipe Company, each being corporations under the laws of the State of Pennsylvania.
Fourth.—The American Transfer Company, a corporation under the laws of the State of Pennsylvania.
Fifth.—The Grant Pipe Company, a corporation under the laws of the State of Pennsylvania.
Sixth.—The Karns Pipe Line Company, a corporation under the laws of the State of Pennsylvania.
Seventh.—The Relief Pipe Line Company, a corporation under the laws of the State of Pennsylvania.
Eighth.—The Pennsylvania Transportation Company, a corporation under the laws of the State of Pennsylvania.
Ninth.—J. J. Vandergrift, G. V. Forman, and John Pitcairn, Jr., trading under the name of Vandergrift, Forman and Company, and owning and representing the Milton and Sandy Pipe Lines.
Whereas, The pipe lines owned and controlled by the parties hereto have a joint capacity for transportation more than twice as great as the total volume of petroleum produced in the district traversed by said lines; and whereas, the separate and discordant relations now prevailing among the parties hereto, lead to a needless multiplication of extensions, branches, and other matters involving heavy cost, which ultimately becomes in some shape a charge upon the business transported, and also leads to the offering of open or secret inducements of an illegitimate nature, such as rebates, special rates, selling oil for less than its cost and full pipage rates, and in other ways hereby to attract an under share of traffic to the respective lines represented herein; and
Whereas, it is believed to be desirable both for the interests of the parties hereto and those of the public whom they serve, that all needless expenditure and all illegitimate inducements should cease; now,
Therefore, for those purposes and for other valuable considerations mutually moving the parties hereto, they do each respectively agree with each other, as follows:
First.—The parties hereto do not by these presents create in any respect a partnership with each other, but each party is to be wholly and solely responsible for all of its own acts in the conduct of its business for its certificates, receipts, and collection of its charges, its expenses, shortages, maintenance, and management of its property, and of its engagements and obligations of every sort.
Second.—The pipe-lines which are covered by this agreement are those which are or may be owned by any of the parties hereto, and which are situated south of Oil City, and which terminate at any of the following points, viz. points on the Franklin branch of the Atlantic and Great Western Railway, points on the Jamestown and Franklin branch of the Lake Shore and Michigan Southern Railway, points on the Alleghany Valley, between or at Oil City and Pittsburg, points on the Schenango and Alleghany Railroad and points on the Butler branch railroad, excepting two small pipe lines, one owned by F. Prentice and Company, running from Mount Hope to Foster, and one owned by Vandergrift, Forman and Company, called the Franklin Pipe Line, running from the heavy oil district to Franklin, Pennsylvania.
Third.—Each party hereto shall retain eight (8) cents per each forty-two (42) gallons remaining after deduction of allowances for shortage and sediment, on all of the oil it actually pumps; also, all allowances made it on such oil to meet shrinkage and sediment, and also all of its other receipts of every description, except as stated on the next article.
Fourth.—Each party shall account monthly to the executive committee hereinafter provided for, at the rate of twenty-two (22) cents for each forty-two (42) gallons of petroleum (after deducting shrinkage allowances) received by it for transportation during such months; which twenty-two (22) cents shall be considered by said committee as a common fund to be cleared and divided on the basis hereinafter designated.
Fifth.—The executive committee shall consist of one representative from each of the parties hereto.
Each representative to be appointed by the party he represents to be changeable "from time to time by such party, at its pleasure; the said committee shall faithfully execute such provisions of this agreement as are by its terms confided to them.
Their action must, in all cases, be unanimous before it shall be binding upon any party hereto.
They shall keep a record of their proceedings, to which each of the members shall have free access, and whenever desired by any, a full transcript, or any part thereof.
The members of said committee shall, until changed, as hereinbefore provided, be as follows: Charles P. Hatch, representing the Union Pipe Company; A. M. Hughes, representing the Antwerp Pipe Company and the Oil City Pipe Company; D. O'Day, representing the American Transfer Company; R. B. Allen, representing the Grant Pipe Company; S. D. Karns, representing the Karns Pipe Line Company; F. Prentice, representing the Relief Pipe Line Company; H. Harley, representing the Pennsylvania Transportation Company; E. Hopkins, representing the United Pipe Lines, Milton Pipe Line, and the Sandy Pipe Lines.
Sixth.—Each party hereto shall furnish to the executive committee, on or before the fifth of each month, a report of its business for the month next preceding, duly verified by the affidavit of its proper officer or agent; and the amounts found due by the executive committee from any of the parties hereto shall be paid by them through the executive committee to the parties to whom they may be due, on or before the tenth of the month in which the report is made.
Seventh.—The committee shall prescribe the form of said return, and shall act as a clearing house thereof. They shall have power to verify the same by inspection of books and records, and shall make to each party hereto, on or before the tenth day of each month, a full exhibit of the results of the returns and clearings for the next preceding month.
Eighth.—The committee shall prescribe and enforce uniform rates and conditions for the reception, storage, and transportation of oil, including substantially uniform wordings of certificates and gaugers' tickets; uniform conditions for the accepting of tanks owned by other parties; uniform conditions as to responsibility for losses through unavoidable causes, such as lightning; and uniform rates of allowances for shrinkages. Until changed by said committee, the rates for transportation shall be as follows:
For each forty-two gallons remaining after deducting allowance for shrinkage and sediment, viz., from all points which, by any pipe-lines represented herein, which terminate at Oil City or on the various railways as hereinbefore described, thirty (30) cents; excepting, First, on oil reached by pipes terminating on the Alleghany Valley Railroad south of Oil City, and north of Parker City. Second, on oil from the west side of the Alleghany River, not pumped from north of Bear Creek. Third, on oil pumped from Sheakley to Monterey by the United Lines, and from south of Bear Creek, and north of Sheakley district by the Union and Karns lines, all of which shall be twenty-five (25) cents. But the rates on oil covered by the third exception shall be made thirty (30) cents on or before January 1, 1875. The only remaining exceptions to these rates on such private contracts at different figures, as each party may now have, a list of which together with any special conditions appertaining thereto shall be filed with the executive committee on or before September 1, 1874; no new contracts for transportation or storage or tankage shall be made by any party whatever, except at the regular rates as herein fixed, or as shall be, from time to time, fixed by the executive committee. All rates less than thirty (30) cents may be at any time advanced to thirty (30) cents by the party subject thereto.
Ninth.—The committee shall adopt all proper and practicable measures to secure the transportation by each line of a share of the total oil pumped each month by all the lines, equal in percentage to the share of the common fund allotted to each herein, having reference to the facilities of each party for doing the work; they shall assign to each party, and as early in each case as possible, such share of the duty of making extensions and connections with wells as most legitimately appertains to it, or as may be required by the well owner, or by the contracts of each party; but constant reference shall be had to maintaining for each party its share as heretofore described of the total oil to be transported, and to distributing the total cost involved as nearly as practicable in the proportion of the common fund assigned to each, and no other party shall make such improvements except by consent of said committee. The committee shall arrange with a chief gauger and the needful assistants (all of whom shall be under oath to act honestly and impartially), to gauge from time to time all tanks with which the lines of the parties hereto are or may be connected, or car tanks which they may load; and may collect the expense thereof from the parties hereto in proportion to their respective shares in the common fund; and may also assess upon the trade such reasonable charge for car gauging, or may wholly waive such charge as they may deem judicious. The committee shall have general power to inaugurate and carry into effect any other features than those especially named herein which will not be inconsistent with and which will in their judgment more effectually accomplish the purposes and spirit of the agreement.
Tenth.—The division of the common fund shall be as follows:
The United Pipe Lines, twenty-nine and one-half (29½) per cent.
The Union Pipe Company, twenty-five and one-half (25½) per cent.
The Antwerp Pipe Company and Oil City Pipe Company, seven (7) per cent.
The American Transfer Company, seven (7) per cent.
The Grant Pipe Company, seven (7) per cent.
The Karns Pipe Line Company, seven (7) per cent.
The Relief Pipe Line Company, seven (7) per cent.
The Pennsylvania Transportation Company, seven (7) per cent.
The Sandy Pipe Line and Milton Pipe Line, three (3) per cent.
Eleventh.—All parties hereto agree to faithfully carry out the spirit and purposes of this agreement, and to do nothing between the date of its execution and the date of its taking effect, inconsistent therewith, and it is mutually agreed that from the date of its taking effect until it is terminated, any violation thereof by any party will work an injury to the whole interest of not less than ten thousand ($10,000) dollars; and if any such violation shall not be fully rectified by the offending party within thirty (30) days after written notice shall have been given to the said offending party by the executive committee, through its secretary, upon a vote of all of said committee except the representative of the offending party, it is agreed that ten thousand ($10,000) dollars shall be the stipulated and liquidated damages for each and every such violation so unrectified, which damages shall be collected by the executive committee, and shall be divided among the other parties hereto in the same relative proportion as the common fund is divided. This contract shall take effect on the first day of October, a.d. 1874, and shall continue for two (2) years, and shall continue after the expiration of said two (2) years until after three (3) months' written notice shall have been given by either of the parties hereto, to the executive committee, through its secretary, of a wish to have it terminate, at the expiration of whch notice it shall cease and determine.
In Witness Whereof, the parties hereto, by their representatives, have affixed their signatures this fourth day of September, a.d. 1874.
The United Pipe Lines: J. J. Vandergrift, George V. Forman, John Pitcairn, Jr., by George V. Forman, Attorney for themselves and others.
The Sandy and Milton Lines: J. J. Vandergrift, George V. Forman, John Pitcairn, Jr., by George V. Forman, Attorney.
For the Relief Pipe Line Company: F. Prentice, President.
For the American Transfer Company: Daniel O'Day, Superintendent.
For the Union Pipe Line Company: Charles P. Hatch, Manager.
For the Grant Pipe Company: R. B. Allen, President.
For the Karns Pipe Line Company: S. D. Karns, President.
For the Antwerp Pipe Company and the Oil City Pipe Company: E. C. Bradley, President.
For the Pennsylvania Transportation Company: Henry Harley, President.