The History of the Standard Oil Company/Volume 2/Appendix/Number 40
NUMBER 40 (See page 28)
TWO AGREEMENTS OF EVEN DATE, AUGUST 22, 1884, BETWEEN THE PENNSYLVANIA RAILROAD COMPANY AND THE NATIONAL TRANSIT COMPANY
[Report of the Industrial Commission, 1900. Volume I, pages 663-666.]
Memorandum of a traffic agreement, made this twenty-second day of August, 1884, between the Pennsylvania Railroad Company, hereinafter designated the railroad company, and the National Transit Company, hereinafter designated the transit company, Witnesseth:
That for consideration mutually interchanged, the parties hereto agree, each with the other, as follows:
First.—The transit company owns an extended system of local pipes in the Oil Regions of Pennsylvania and New York, which are grouped into a separate division, known as the United Pipe Lines Division of the National Transit Company. This division will be hereinafter designated as the Transit Company's Local Division.
The business of this division is to collect oil from producer, store it in tanks, and deliver it, as may be desired, to any through carrier of petroleum, which will transport the same to where it is to be refined or otherwise disposed of.
The transit company also own certain through or trunk line pipes, extending from several points of connection with the aforesaid local pipe division to various refining and terminal points.
With these latter pipes, which will be hereinafter entitled the Transit Company's Trunk Line Division, it competes in the through carriage of petroleum with all other through carriers, whether pipe or rail.
The business of its local division is therefore entirely distinct from the business of its through trunk line division.
It undertakes and agrees that its local division will deliver into cars furnished by the railroad company at any of its regular delivery points and under its regular delivery rules whatever petroleum the owners thereof may desire to have so delivered, and as the railroad may furnish cars to transport, and will make no discrimination in its local charges for carriage, storage, and other services, or in the use of any of its local facilities, against such oil, but will at all times treat it in the said respects as favourably as it at the same time treats any other petroleum which may be delivered to its own trunk line division or to any other through carriers.
Second.—The transit company agrees that all petroleum brought to the Atlantic seaboard by all existing carriers, whether rail or pipe, now engaged in transporting such property, or which may hereafter engage in such transportation in conjunction with the transit company's pipe-lines, shall be ascertained monthly, and so much of it as shall have been shipped in the refined state shall be reduced to its equivalent in crude oil by considering that one and three-tenths (l3⁄10) gallons of crude are required to make one (1) gallon of refined oil. It further undertakes and agrees that if of the total so transported the railroad company shall not have moved in its cars twenty-six (26) per centum thereof, the transit company shall cause to be delivered to cars furnished by the railroad company at Milton, Pa., such quantity of crude petroleum as shall, when added to the amount which has been actually transported by the railroad company to the seaboard in said month, make the total transported by the railroad company in said month equal to said twenty-six (26) per centum.
The railroad company agrees to furnish the needful cars and facilities, and promptly transport the oil which the transit company agrees in this contract to deliver to it at Milton:
Provided, That if during any month the railroad company is not able to assign from its oil equipments a sufficient number of cars to the traffic of the transit company to move the proportion of oil herein provided to be delivered at Milton, then during that month the transit company shall only be required to so deliver to the railroad company such quantity of oil as the railroad company shall be able to transport, and shall not be required to make up any deficiency that may occur during said month.
Efforts shall be made by the transit company to deliver so much during each month as will probably be necessary to make the total carried by the railroad company equal to said percentage.
Shortages, if not due to short supply of cars, and such excesses as may be found to have occurred in any month, shall be adjusted in the following month, or as soon afterwards as shall be possible.
Third.—It is agreed that the proportion of petroleum which the transit company is to deliver under the second section of this agreement shall be considered as petroleum transported from Coalgrove, Pa., via Milton, Pa., to the Atlantic seaboard, and that the railroad company shall be entitled to one-half of the current through rates thereon.
It is agreed that whenever the through rates shall be so low that the railroad company shall suspend the movement of oil by its cars, at other points than Milton, the transit company shall during such suspension not be bound to deliver to the railroad company any oil at Milton.
Fourth.—All joint rates for the joint transportation of oil from any delivery point of the local pipe division aforesaid to any refining or terminal point shall be fixed by the railroad company, subject to the advice and concurrence of the transit company.
It is agreed that said joint through rates shall be uniform to all parties. The railroad company stipulates that it will make no discrimination whatever, either in rates or facilities, against the transit company or against the oil which the said transit company herein covenants to deliver to it.
It is agreed that the joint through rates to Philadelphia shall always be five cents less per barrel on crude oil, or its refined equivalent, than shall be currently charged to New York harbour.
It is agreed that the joint through rates, which shall be so fixed from time to time, shall be as low as shall be currently made between same and similar points by rival carriers of petroleum, and shall not be higher than an approximate mileage proportion of rates current on petroleum produced south of Oil City, nor than rates from Olean and similar points.
It is also agreed that rates on refined oil and other products of crude oil shall be fixed by the railroad company upon the following basis, viz.:
From railroad stations in the Oil Regions to which oil is delivered by local pipes the rate to any point east thereof on a barrel of refined oil or other products shall be one and three-tenths (13⁄10) times the current rate on a barrel of crude oil to the same point.
From Pittsburg the rate to any point east thereof on a barrel of refined oil or other products shall be one and three-tenths (13⁄10) the rate currently charged on crude oil to any such eastern point from rail points south of Oil City:
Provided, That one and three-tenths times the charges for moving a barrel of crude oil by rail or through pipe from the local pipe to Pittsburg shall first be deducted therefrom.
From Cleveland and Buffalo the net rate on a barrel of refined oil or other products to any point east thereof shall be not less than is currently charged to the same point from Pittsburg.
Fifth.—Whenever the term barrel is used herein, unless otherwise specified, it means forty-five gallons of crude petroleum; and whenever the term oil is used herein, unless otherwise specified, it means crude petroleum.
Sixth.—The transit company hereby agrees that it will not make any more favourable terms with any other rail line connecting with any of its pipes than the terms which under this agreement are given to the railroad company; or if for any reason it should desire to do so, it hereby agrees to modify this contract so as to give the said "more favourable terms" to the railroad company.
Seventh.—All existing contracts between the parties hereto shall be deemed to have been accomplished, and shall become void and of no effect upon the day this contract goes into operation.
Eighth.—This contract shall take effect as of the first day of August, 1884, and shall continue until terminated under the provisions hereof. It may be terminated after August 1, 1889, by either party hereto giving ninety days' written notice to the other of a desire that it shall end, at the expiration of which notice it shall cease and determine.
In Witness Whereof, the parties hereto have executed this agreement under their corporate seals the day and date above written.
[L.S.] By Frank Thomson, Second Vice-President. [L.S.] By C. A. Griscom, President.
Memorandum of agreement, made this twenty-second day of August, 1884, between the Pennsylvania Railroad Company, hereinafter designated the railroad company, and the National Transit Company, hereinafter designated the transit company.Witnesseth: That for considerations mutually interchanged the parties hereto hereby agree with each other as follows:
Whereas, The parties hereto have made an agreement of even date herewith, in which, among other things, it is stipulated that under certain circumstances the transit company shall deliver certain crude petroleum into cars furnished by the railroad company at Milton, Pa.; and
Whereas, It has been proposed that the railroad company shall contract with the transit company to the effect that the transit company shall transport through its pipe-lines the aforesaid crude oil, which, under the other contract aforesaid, it has undertaken to deliver into the cars of the railroad company at Milton.
Now, therefore, this agreement witnesseth:
First.—The railroad company agrees that instead of delivering said crude oil to said cars at Milton, the transit company shall transport the same through its pipes to destination, and the transit company undertakes and agrees to do such transportation. It is mutually agreed that the compensation to the transit company for doing said work shall be as follows:
Whenever the through rate for transporting a barrel of crude petroleum from Olean to Philadelphia shall be forty cents, the transit company shall receive eight cents per barrel as such compensation for so much of said oil as under the provisions hereof shall be considered as Philadelphia oil.
For each five cents of increase or diminution in said rates from Olean to Philadelphia the said compensation on Philadelphia oil shall be increased or diminished one cent per barrel.
Provided, however, That the transit company shall not be obliged to accept less than six cents per barrel, and shall not receive more than ten cents per barrel on such Philadelphia oil.
It is agreed that the said compensation on the oil, which under the provisions hereof is to be deemed New York oil, shall be one cent per barrel greater than it currently shall be on Philadelphia oil.
Whenever, and from time to time, as the said joint through rates shall be so low that the said minimum compensation to the transit company of six cents per barrel shall be as much or more than the railroad company's share of said joint through rates, this contract may, at the option of either party hereto, be suspended during all or any part of the time such low rates shall prevail. During such suspension the aforesaid other contract shall alone remain in force; but whenever, and from time to time, as said joint through rates shall again be high enough to make the said minimum compensation, under said sliding scale, less than the said share of said joint through rates, this contract shall again resume its force and effect.
Second.—The transit company agrees to account for, and pay to the railroad company, on or before the twentieth of each month, the latter's share of the joint rates on joint business via Milton (as provided in said other contract) during the next preceding month, first retaining, however, the proportion of such share which it is hereinbefore agreed the transit company is to have for its services in pumping said oil to the seaboard.
It is agreed that all such joint business shall be considered as having transported from Coalgrove via Milton, Pa., to the Atlantic seaboard, and that it shall be considered as having gone either to Baltimore, Philadelphia, or New York, or partly to each. The proportion thereof which has constructively gone to New York shall be determined upon the following basis:
The total amount of oil transported in any month by the railroad company to New York shall be compared with fifty (50) per centum of the total oil which the railroad company is entitled to carry in said month under the aforesaid other agreement. If the amount which has been in such month carried by cars to New York shall be less than fifty (50) per centum, then the difference shall be considered as having been moved by the pipe to New York, at New York rates, and shall be accounted for accordingly. The remainder of the oil via Milton shall be accounted for at Philadelphia rates.
This contract shall commence and terminate simultaneously with said other contract.
Witness the corporate seals of said parties duly attested the day and date above written.
[L.S.] By Frank Thomson, President. [L.S.] By C. A. Griscom, President.