Ohio Natural Gas Wars, Conclusion

Here are two final chapters from Henry Demarest Lloyd’s Wealth Against CommonwealthXXII and chapters XXIII-XXIV. A pdf file of all five chapters is available in the Libertarian Labyrinth. For a bit more of Northwest Ohio’s struggle against Standard Oil, see this first post on George H. Phelps and his The New Columbia, or the Re-United States. (1894), dealing with the struggles of Toledo against the natural-gas and oil trusts. Previous posts contains chapter

Wealth Against Commonwealth
Henry Demarest Lloyd (1847-1903)
IN the midst of the anxious discussion by the citizens of Toledo as to the character of the power which ruled them both by night and by day, the same question arose in the metropolitan religious press, but in its broader ethical aspects. After the petition of Toledo to be allowed to take the control of its light, heat, and power into its own hands had been laid before the Legislature, the National Baptist of Philadelphia, in an article on the trusts, criticised them as the prophet Nathan would have done. It gave to that in oil, “of course, the bad pre-eminence in all this matter.” “This corporation has, by ability, by boldness, by utter unscrupulousness, by the use of vast capital, managed to control every producer, every carrier, to say nothing of the legislatures and courts.” The Examiner, the leading religious weekly of the Baptist denomination in New York, rose against this. “We can readily understand how there should be differences of opinion in the matter of these trusts, and their influence is a proper subject of discussion; but to make it the occasion of so unjust and intemperate an attack on Christian men of the highest excellence of character is something that was not expected from a paper bearing such a name. The four most prominent men in the oil trust are eminent Baptists, who honor their religious obligations, and contribute without stint to the noblest Christian and philanthropic objects…. All of them illustrate in their daily lives their reverence for living Christianity.”

The National Baptist did not submit to this attempt to cite men’s creeds to prevent judgment on their deeds. It quoted the reply Macaulay makes Milton give to the similar pleas urged for King Charles: “For his private virtues they are beside the question. If he oppress and extort all day, shall he be held blameless because he prayeth at night and morning?” It held to its ground, and cited against the trust the recorded evidence, but it declared it was “a marked breach of propriety for the Examiner to bring their private character into the discussion.” The National Baptist, going on to speak in praise of a series of lively cartoons in Harper’s Weekly on the Forty Thieves of the Trusts and similar subjects, said, with some sadness: “It will be a sorry spectacle if the secular papers shall be ranged on the side of justice and the human race, while the defence of monopoly shall be left to the so-called representatives of the religious press.”

Later, March 20,1890, the Examiner returned again to its discussion of the religious performances of the chiefs of the oil trust as a matter of public importance. Of one of them it said: “The prayer-meetings of the Fifth Avenue Church are on Wednesday evening, and no business man in the church is less likely to be absent from one of them than he. His wife and children, when they are in the city, come with him, and it is by no means an unusual thing for the whole family to take part, each of them occupying one or two minutes of time. He and they are at church every Sunday when in the city, and no husband and wife keep up the good old Baptist habit more faithfully of exchanging a kind word with the brethren and sisters after the regular services are over. He dresses plainly, and so do his family, and every one of them has a kind heart and a pleasant word for all. They are among the last to leave the church and the prayer-meeting. Now the question is, How is it, as things go, that a man possessing the great wealth imputed to him should have so warm a fraternity of feeling for the lowly in their temporal conditions? And is there not an example here that might well be imitated in all the churches of our Lord?

In an address on corporations the reverend secretary of the Church Edifice Department of the Home Missionary Department of the Baptist Church followed the example of the leading Church Journal. “The oil trust was,” he said, “begun and carried on by Christian men.[1] They were Baptists, and, so far as the speaker knew, both the objects and the methods of the oil trust were praiseworthy.” A clergyman of another denomination once called upon one of the great men of the trust to seek a subscription.

“But,” said the rich man, “I am not of your Church.”
“That does not matter,” said the minister, “your money is orthodox.”

The secular press followed the example of the religious press in treating their public faithfulness to Church ceremonies as news of the day, and part of the record of their social functions. The New York correspondent of the Philadelphia Daily Record wrote for the people of Philadelphia: “It is not often that a millionaire stands up to lead in prayer, but I heard the president of the oil combination make an excellent prayer the other evening. He is said to be worth $25,000,000, but he neither drinks nor uses tobacco, and he is a deacon in Dr. Armitage’s church. He likes a fast horse, and has eleven horses in his stable here. Few men, however, lead plainer lives than he, and few put on less style. He gives liberally to unsectarian charities, but, he says, ‘when it comes to Church work I always give to the Baptists—my own denomination— and to no other Church.'” A New York daily described the same trustee “as one of the few millionaires who devote much of their time to the improvement of the condition of others. When not called away by social or business engagements, you are pretty sure to find him at home evenings. Here, in his costly and well-equipped library, he receives his visitors, many of whom represent the various benevolent and religious undertakings in which he is interested. He has for years been a hearty supporter, financially and personally, of foreign-missionary work, and no layman, perhaps, is so well informed concerning the details of it. He has a personal acquaintance with many of the leading missionaries of the world, and his residence is frequently the scene of a gathering of these workers among the heathen. He is now devoting considerable attention to home-missionary work, a field which, he is convinced, presents splendid opportunities for Christian endeavor.”

Many descriptions have been given by the press, metropolitan and interior, of the success with which one of the trustees built up the largest Sunday-school in his city at the same time that he was building up the monopoly—leading the children of his competitors and customers to salvation with his left hand, while with his right he led their fathers in the opposite direction financially. The church where these men appear has had columns of admiring description in the leading daily papers of New York and other cities. “There are few wealthier congregations than this one,” says a reporter of the New York World, though he adds, “the wealth is elsewhere more evenly divided.” The trustee of the light of the world “is the magnate of the church, the centre around which all lesser millionaire lights revolve. Everybody stops to speak and shake hands with him. Everybody smiles upon him, this modest man of nearly $200,000,000.” “It is amusing,” says the Brooklyn Eagle, “to note the manner in which his neighbors watch him during the service. Quite a number of people loiter near the door to see him as he walks out of church.” “They are worth a bit of careful study,” says another paper of the trustees, “and no place is quite so convenient as when they are at church. Their interest in religion is as sincere as their belief in oil. From the moment they enter church until they leave they are examples that Christians of high and low degree might follow with profit.” “They have made the most of both worlds,” writes another journalist. The oil trust was criticised by the Rev. Washington Gladden at Chautauqua, in 1889. One of its prominent officials, as reported in a friendly journal, defended it as “a sound Christian institution; and all these communistic attacks are due entirely to the jealousy of those who cannot stand other people’s prosperity.”[2]

“In Anniversary week” in Boston, in May, 1889, at the meeting of the American Baptist Education Society, the secretary said he had an announcement to make. “It had been whispered about,” says the New York Examiner of May 23, 1889, from whose friendly account we are quoting, “that something important was to occur at this meeting, and a breathless silence awaited the announcement. Holding up a letter, the secretary said that he had here a pledge from a princely giver to our educational causes, naming him (here he was interrupted by a tremendous cheer), of $600,000 for the proposed Chicago college. . . . This statement was followed by a perfect bedlam of applause, shouts, and waving of handkerchiefs. One brother on the platform was so excited that he flung his hat up into the air, and lost it among the audience.” Eloquent speeches at once overflowed the lips of the leading men of the meeting, which was a delegate assembly. They sprang to their feet, one after the other, and mutually surpassed each other in praising God and the giver of this gift, which was equal to his income for a fortnight. “I scarcely dare trust myself to speak,” said a doctor of divinity. “The coming to the front of such a princely giver—the man to lead. . . . It is the Lord’s doing. . . . As an American, a Baptist, and a Christian I rejoice in this consummation. God has kept Chicago for us; I wonder at his patience.” Another reverend doctor said: “The Lord hath done great things for us…. The man who has given this money is a godly man, who does God’s will as far as he can find out what God’s will is.”

The audience rose spontaneously and sang the Doxology. On motion the following telegram was sent, signed by the president of the society:

“BOSTON, May 18, 1889.

“The Baptist denomination, assembled at the first anniversary of the Education Society, have received with unparalleled enthusiasm and gratitude the announcement of your princely gift, and pledge their heartiest co-operation in the accomplishment of this magnificent enterprise.”

The name signed to this telegram happened to be the same as that of the divine with whom, when president of Brown University in 1841, one of the most devoted of the laborers for the freedom of the negro had a discussion which is perhaps the most pungent in the literature of the antislavery movement.

On August 30,1841, Henry C. Wright wrote to Edmund Quincy: “I once met the president of Brown University, in the presence of several friends, to converse on the subject of slavery. The conversation turned on the question: Can a slaveholder be a Christian? To bring it to a point, addressing myself to the doctor, I asked him, ‘Can a man be a Christian and claim a right to sunder husbands and wives, parents and children, to compel men to work without wages, to forbid them to read the Bible, and buy and sell them, and who habitually does these things ?’ ‘Yes,’ answered the reverend doctor and president, ‘provided he has the spirit of Christ.’ ‘Is it possible for a man to be governed by the spirit of Christ and claim a right to commit these atrocious deeds, and habitually commit them?’ After some turning he answered, ‘Yes, I believe he can.’ ‘Is there, then, one crime in all the catalogue of crimes which of itself would be evidence to you that a man had not the spirit of Christ?’ I asked. ‘Yes, thousands,’ said the doctor. ‘What?’ I asked. ‘Stealing,’ said he. ‘Stealing what, a sheep or a man?’ I asked. The doctor took his hat and left the room, and appeared no more.”[3]

The Sunday following a special service was held in the churches throughout the country in behalf of further help in “the new educational crisis.” Many eulogistic sermons were preached that day by the leading clergymen of the denomination. “And so,” one of them is reported to have said, “when a crisis came God had a man ready to meet it. . . . An institution was bound to come, and unless a God-fearing man established it it was likely to be materialistic, agnostic. . . . In this emergency, and in God’s providence, society raised up a man with a colossal fortune, and a heart as large as his fortune.” “God,” said the Chicago Standard, a religious weekly, “has guided us and provided us a leader and a giver, and so brought us out into a large place.”

Another of the trustees has poured into a Southern State hundreds of thousands of dollars for churches of various denominations, and millions for hotels of a more than Oriental magnificence. “There is no philanthropist,” says an editor of that State, commenting on these expenditures, “who renders the world greater service than the man of enterprise.” But “Western Pennsylvania,” said the Pittsburgh Post, “looks more with awe than pride at the liberal diffusion of its wealth in Florida improvements and Baptist universities.” A daily paper of Richmond, Virginia, in an editorial commenting on a report that the hostelry glories of St. Augustine were to be repeated in Richmond, said: “We have naught to remark on the tyrant monopoly if some of its profits are to come in such a direction. We could forgive much that monopoly visits on the down-trodden, horny-handed son of toil if it would come with open pockets proclaiming the era of luxuriant accommodations for all those other millionaires whose money we want to see invested in Richmond.”

The next year after the Boston meeting the Church celebrated its “Anniversary week” in the city which was to be the seat of the new college. And the anniversary closed with a jubilee meeting, which filled the largest assembly room in America. “All the church-going people of Chicago must have attended,” one of the daily papers said. It was addressed by the principal clergymen of the denomination from all parts of the country. Again, as at Boston, the centre of interest was the gift of a fortnight’s income to the university. A telegram making the gift conclusive, since the conditions on which it was promised had been complied with, was read. Cheer after cheer rose from the assembly, and oratory and music expressed the emotion of the audience. The divine who made the closing speech declared that he needed ice on his head on account of the joyful excitement of the occasion. The cheers and the hand-clapping closed again, as at Boston, with the spirited singing of the Doxology. Not only in the religious press of all denominations, but in the worldly press, the topic was the best of “copy.” The great dailies gave columns, and even pages, to the incident, and to the subsequent gift from the same source of larger sums. “Conspicuously providential,” “princely,” “grand,” “munificent contribution,” “man of God,” were the phrases of praise. A writer in the New York Independent said: “Your correspondent speaks from opportunities of personal observation in saying that pecuniary benefaction to a public cause seldom if ever, in his belief, flowed from a purer Christian source.” The only recorded note of dissent came from a humbler source. Under the text, “I hate robbery as a burnt-offering,” a weekly business journal said: “The endowment of an educational institution where the studies shall be limited to a single course, and that a primary course in commercial integrity, would be a still more advantageous outlet for superabundant capital. Such an institution would fill a crying want.”

It was the last Thursday in May, 1890, when this great representative convention of the Church from all parts of the United States celebrated the acceptance of this endowment. Even while the roll of the Doxology was still rising to the roof of the auditorium the plans were preparing for a performance at Fostoria the next Sunday, three days later, which had a profound effect upon Toledo, though just the opposite of what was expected.

Fostoria, Ohio, is the home of the president of the principal natural-gas company in Ohio controlled by the oil trust and leader in the vendetta against Toledo. A wealthy miller erected in Fostoria in 1886 a flouring-mill, with a capacity of 1000 barrels a day. One of the inducements was a contract made with this manufacturer by the gas company, by which it bound itself to supply him with natural gas at a price which would be one-fifth what coal would cost him, and to continue to supply him as long as it supplied any one. The manufacturer carried out his agreement by the expenditure of $150,000 for the erection of the mill, and by running it continually to its full capacity. His bills for gas he paid promptly every month. Relying upon the contract with the gas company, the mill was built for natural gas, and could use no other fuel. In February, 1890, the gas company, dissatisfied with the bargain it had made, demanded better terms. The milling company refused. On a Sunday morning in June, “when, if ever, come perfect days,” a gang of men appeared, led by an officer of the gas company, and dug up and tore out the pipes supplying the mill with gas.

Church bells of different denominations were scattering their sweet jangle of invitations to the sanctuary as the tramp of these banded men, issuing on their errand of force, mixed with the patter on the sidewalks of devout feet. Private grounds were unlawfully entered, property was destroyed, the peace broken, a day of love changed to one of hate, all the bonds of community cut asunder, and the people turned from the contemplation of divine goodness to gaze at shapes of greed and rage. Sunday is chosen for such deeds, since the help with which the pagan law, gift of heathen Rome, would interpose, cannot be invoked by the victims on Sunday, and because on Sunday Christian people go to church, and leave their property undefended. The peace-officers were summoned to arrest the invaders for violating the Sunday law, but before they could get on the ground the mischief was done. The pipes had all been excavated, the connections wrenched off, and the trench nearly filled up. The milling company began suit for $100,000 damages against the gas company,[4] but a private settlement was made, and the case has never been pressed to trial. The laborers who did the work of the Captains of Industry in this matter were tried and convicted at the County Court in July, but by no process did the law, which is “no respecter of persons,” reach out towards the principals.

This Fostoria incident occurred during the heat of the Toledo contest—June, 1890—while the city was pushing the sale of bonds for its emancipating pipe line by popular subscription and in odd lots. Notice had been already served on the people of Toledo at public conference, that despite contracts, charters, franchises, the private companies would not take any less price from Toledo than they demanded. In pursuance of this, after the council had fixed the price in accordance with its admitted right, a circular was sent out containing this significant threat: “If it”—the legally declared price—”is approved by our customers we will know what course to pursue.”

Even before the occurrence at Fostoria it had been definitely suggested to the people of Toledo that in case the council failed to accept the demand as to rates in making the new ordinance (July, 1890) the pipes would be so far removed as to cut off the supply on some Sunday when no legal help could be invoked. The possibility of this Sunday cut-off of the fuel supply of 15,000 consumers became a living topic of discussion, public and private, and was considered in all its bearings by the Toledo press. Calculations were made and published of the number of men it would require to take up the hundred miles or so of pipe in the streets of Toledo between dark and dark some holy Sabbath day. It was confessed, hopelessly, that they would be more than the police could handle. “Of course,” as was said in the Toledo Blade by a leading citizen, “such enterprise would involve a very remarkable degree of both lawlessness and desperation on the part of the managers. It would be a mode of withdrawal from trade quite unknown among sound business men. But then their processes have been peculiar from the start.”

It was nothing less than startling to Toledo, almost before the print on the types of these words was dry, to hear the news from Fostoria of the Sunday raid there. There were those who declared that the Sunday violence at Fostoria was deliberately done as a warning to Toledo. If it were a warning to them not to insist on the legal and equitable and contract right of their Common Council to fix the rates of gas, it was a failure. The council went forward and did its duty. If it were a warning to the people to redouble their labors to free themselves forever from the possibility of such thralldom as that in which Fostoria and other cities were enchained, it was a success. The people heard and heeded, and in ten months thereafter gas began to flow into the city through its own pipes.

IT was remarkable to see the revival of the passion of freedom of 1776 and 1861 in the editorials, speeches, resolutions of public meetings, and the talk of the common people in Toledo as in Columbus. The example of “the heroic liberty-loving people of Boston” was held up in every aspect to fire the heart of Toledo not to be frightened into subjection to the foreign power that threatened them. To resist “the domination of an economic monarchy” was the appeal made in posters with which the town was placarded.

“During all the time George III.’s soldiers were quartered in Boston that monarch did not spend as much money to bring the city to terms as has been spent in this effort to subjugate the city of Toledo,” said Alderman Macomber.

“A people like those of Toledo,” said one of them in the press, “when once united and determined as they now are, cannot be subjugated by any combination of mercenaries yet known.”

“It is evident,” the Toledo Sunday Journal said, “that the people of Toledo have come to a full realization of the truth that the money saved by the independent pipe line, though great, is a matter of little importance compared with the social and political issues involved. It would be a thousand times better,” it continued, “to utterly bankrupt the city than permit the oil combination to win. The fight was not for the present alone, but it was for the present and future, and for all time to come. It was not for the people of Toledo alone, but it was for the whole Union, though God had chosen the people of Toledo for the struggle.”

The Cincinnati Commercial-Gazette said, in its editorial columns: “In itself the Toledo enterprise is not a big one, but it will prove an object-lesson for the whole country. It will show the open door through which people may pass from under the yoke of a most gigantic, unscrupulous, and odious monopoly. And it will be surprising if this does not extend beyond gas and ultimately cover oil. We are only on the verge of a revolution that is as sure to come as that which followed the throwing overboard of a lot of tea in Boston Harbor. Neither the power nor the vulgarity of capital can long rule the people.”

Numerous letters of sympathy, congratulation, and indignation were received by the Toledo committee appointed by the citizens’ mass-meeting to make a statement of their case to the people of the United States. There were letters from chairs of political economy in the universities, from scholars and students in history and politics, and from men in affairs and finance.

The completion of the line to the city was not the completion of the enterprise. Mains had still to be laid in the streets, and house connections made. At every step, now as before, unrelenting opposition did all that could be conceived of—in the courts, the Legislature, the city government, the money-market—to block municipal self-help. Great numbers of the citizens desired to change from the private companies to the city. Over 700 consumers were at one time, in 1891, calling upon the city to supply them.[5] The litigation which was kept up, and the defeat of the attempt of the city to sell its natural-gas bonds in the open market, had exhausted the funds at the disposal of the city trustees. But they showed a readiness of resource equal, with the help of the people, to all these emergencies, and proving that public enterprise can more than hold its own in the competition with private enterprise. Contractors were got to pipe the streets by sections, and take for pay the pledge of the income earned by the pipes so laid. In other cases people wanting the gas were willing to advance a part of the cost. The same contractor who had faith enough in the city to build the main line from the gas fields and take the bonds while they were under fire volunteered in the same way to build the submerged lines across the Maumee River, and ten miles of mains within the city. This was done at a moment when otherwise the enterprise must have come to a stop, and the name of this patriotic contractor is given to the public by the trustees in their annual report with words of gratitude.

The amount of bonds originally authorized was $750,000. The trustees, in consequence of the delays and enhanced cost caused by lawsuits and other tactics of opposition, had to incur a floating debt of $300,000. The council by ordinance directed the issue of bonds by the city to the amount of $120,000 to pay off part of this floating debt. The State Circuit Court refused to sustain this action of the council, but pointed out that all the city lacked was the authorization of the Legislature. This was the only decision against the city in all the litigations, and in this the State Court was afterwards overruled by the United States Circuit Court. A bill was accordingly introduced, giving the city the right to issue $300,000 in bonds for the floating debt, and $100,000 for the extension of the gas plant: wells, pipes, pumps—whatever was needed. A strong lobby immediately appeared in the State Capitol to defeat the bill. As part of its ammunition a pamphlet was circulated among the legislators, giving “Facts and Reasons” why the Legislature should not authorize the new issue of bonds. This pamphlet illustrates the easy virtue with which some lawyers dispose of themselves to those who have the money to pay them. Two of its strongest points were that the contracts for which the floating debt had been incurred were let without proper competition, and that the trustees had no power to make the contracts. This pamphlet was signed by two lawyers, one of whom, before these contracts were let, had given the trustees his written opinion supporting such contracts unqualifiedly. The representatives of the people were able to exhibit to the Legislature his written opinion stating that the trustees had the power to make the contracts, and had let them in compliance with the requirements of the statute as to bids. The pamphlet declared that the court, in granting the injunction against the issue of the $120,000 of bonds by the Common Council, had declared the claims which were to be paid by the proceeds of the bonds to be “illegal and invalid.” This was untrue. The court had held only that the city had not the power to issue the bonds, and pointed out that the remedy was in new legislation by the State to remedy the want of power.

Pursuing the tactics of defamation of the city and its authorities which had been used throughout this contest, the pamphlet said: “We are prepared to prove . . . that the contractors put in their bids substantially as gambling transactions, at such excessive price that they thought they could take the risk of the illegality of the natural-gas proceedings, trusting that these illegal transactions would be permitted to pass without question, or that subsequent legislation would ratify these illegal acts; all, or nearly all, of the contracts were taken at prices more than double the fair cash value for all the work and material provided for; and all the work and materials, the claims for which now aggregate about $350,000, could have been obtained in the open market, under valid laws, upon proper terms of payment, for less than $250,000. We have the evidence within our control to establish that the work under some of these contracts was actually done for less than 40 per cent. of the amount named in the contract. In addition to these facts, we can establish, if permitted to offer evidence, that the certificates issued by the natural-gas trustees were, immediately after the conclusion of the contracts and before any litigation was had upon them, hawked about the streets of Toledo at from 60 to 75 cents on the dollar; and that the great majority of these certificates are now in the hands of speculators, who bought them at not to exceed 65 per cent. of their face value.”

The authors of these statements were at once challenged by the city’s gas trustees to prove them. “We assert,” the gas trustees said, in a formal challenge, “that you cannot establish the truth of those statements. We deny that the facts are as you state them to be, either in substance or in detail.” This was signed by John E. Parsons, W. W. Jones, Reynold Voit, J. W. Greene, gas trustees, and Clarence Brown and Thomas H. Tracy, ex-gas-trustees. The city’s trustees proposed that they and their accusers deposit $1000 on each side as a forfeit to abide the result of an inquiry by the three judges of the Court of Common Pleas, or any other disinterested arbitrators. They placed at the service of the accusers and the arbiters all the books, records, and employees of the city’s gas department.

The challenge was not accepted, and the authors of these attacks made no attempt to prove them. The Legislature disregarded them, and granted the city and the gas trustees all the additional power to issue bonds asked for. In a subsequent proceeding in the Federal courts—the issue involving the validity of these certificates—it was admitted, contrary to these allegations, that the prices were fair, and that the contracts were entered into in good faith, and the court held the certificates valid.

The most serious crisis in the contest was still to come. In 1892 the gas wells of the city began to do what the people of the city will never do—surrender to the enemy. When the oil trust found, after years of opposition in the Legislature, the courts, and the gas-fields, that it had been helpless to prevent Toledo from getting ample tracts of excellent gas territory, with some of the largest gas wells in the field, and equal to the supply of the entire consumption, domestic and manufacturing, it turned to other tactics.

All about this territory secured by Toledo and found so productive the private companies of the trust proceeded to buy or lease and to sink wells. The trust shut off all its own wells, except those adjacent to the city territory, and for two years drew exclusively from the wells nearest those of the city. When the city’s line was completed to the wells the volume of gas was found to be largely reduced. It had been drawn off into the wells of the opposition. In the spring of 1892 the private companies resolved to put in pumps to strengthen the diminished natural pressure, but to prevent the city from doing the same thing. Then, with their pumps alone at world, the pressure could be so much further reduced as to render the Toledo pipe line valueless. To this end all efforts were directed. The newspapers were kept full of matter showing how impossible it was to pump gas, that all the money expended in pumps would be just so much wasted, and that the companies had canvassed the matter fully, but abandoned the idea. Column after column of inspired interviews filled the papers, all admonishing the city of Toledo not to commit such an act of folly as to put in gas pumps. Then application was made to enjoin the sale of the bonds authorized by the council and the Legislature for pumps. So month after month dragged along. The bonds remained unsold, and the pumps unobtainable.

The injunction was refused both by the Court of Common Pleas and by the Circuit Court. But there was a right of appeal to the Ohio Supreme Court until the beginning of 1892. Boston bankers had subscribed for a large block of the bonds, but withdrew upon learning these facts. “It is possible for the contestants,” the lawyers advised them, “to carry the matter to the Supreme Court. This, we understand, they propose to do.” The simple assertion of a purpose to continue the litigation was enough to defeat the sale of the bonds. The payment of costs and lawyers’ fees would be a very moderate price to pay for compelling the city’s gas plant to go past mid-winter without the pumps indispensable for its operation. One of the employees of the private pipe line, according to an account in one of the Toledo papers, declared to a reporter that “if we could not prevent the city from putting in a [pumping] plant any other way, we would blow it up with dynamite.”[6]

Any faithful employee familiar with the blowing up of derricks in the shut-down of 1887,[7] the explosion in the independent refinery at Buffalo,[8] and the “chemical war” waged by the whiskey trust against the “outsiders” in Chicago[9] might almost be pardoned for thinking this was “only good, reasonable talk.” The oil monopoly is evangelical at one end and explosive at the other, and it has made both ends meet.

The people of Toledo were thus prevented from getting the pumping facilities ready during the summer of 1892 for the work of the winter. Meanwhile its rival had been secretly pushing pumps for itself to completion, in the hope that it alone would be ready when cold weather came. This would mean a gain to it, at the city’s expense, of hundreds of thousands of dollars. Late in August, 1892, the representatives of the city found that two powerful duplex gas pumps had been shipped to the gas-field, and were being put in place by the very opponents who had declared pumps impracticable. Public sentiment became aroused to the need for the immediate purchase of pumps to protect their wells. The city attempted to use its income from the sales of gas to buy pumps. An injunction was applied for and granted. This emergency was finally met by having the gas trustees hand over to the city authorities the accumulated earnings they were forbidden by the court to spend themselves. The city thereupon turned around and invested this money in the gas bonds. In this way the identical money the gas trustees could not use while it remained in their hands was made available to them by passing through the hands of the Sinking Fund Trustees, and coming back to them. Thus the natural-gas trustees were enabled to make a contract in September, 1892, for pumps to assist the flow of gas to the city.

The gas pumps are a patented device. The private companies, wanting all the profit of everything, had their pumps made at their own factory. The city made its contract directly with the owner of the patents. The result was that the city got its pumps in place in time to save the city pipe line, while its opponents were delayed by the inexperience of their own pump-makers. This was the most critical period in our history. Greed had again defeated itself. Had the Opposition gone to the owner of the patents he would have been unable afterwards to take the city’s contract and complete it in time, and the effort to make the city line valueless would have succeeded—for the time being, at least. The bonds in question were afterwards held valid by the Supreme Court.

Toledo knew it was building wisely, and every day brought new proof that it had builded better than it knew. Its saving was great, but that was the least of its gains. It escaped tyranny and extortion and other wrongs which fell upon communities in plain sight, which had not the wit and virtue to establish their independence. When the city pipe line was opened in 1891 the city began supplying gas to its citizens at 8 cents a thousand for houses. The private companies were charging 12 cents a thousand, or 50 per cent. more. Profits were such at this charge of 12 cents a thousand feet that in some tracts single wells would repay the cost of the land every four days and two hours, or eighty-nine times a year. Since then the private corporations have raised their rate to 25 cents. The city continued the rates at 8 cents until December, 1892, when the rate was advanced to 15 cents. This advance would have been unnecessary but for the losses arising from the obstructions placed in the way of the city plant.

The people of Toledo got their gas lands, pipe line, and street mains for an outlay of $1,181,743 up to the end of 1891,[10]

Private enterprise cannot find rhetoric strong enough to express its contempt for the inefficiency, costliness, and despotisms of public enterprise. Private enterprise put at $6,000,000—twelve times the amount of the property they reported for taxation—the “capital” stock invested by the two natural-gas companies. The city pipe line was capitalized (bonded) at just what it cost—a little more than a mill ion. The city trustees built a better pipe line than private enterprise had laid. The private line was of cheap iron of 14-feet lengths, while Toledo’s was in 24-feet pieces. One of the private lines was laid with rubber joints and in shallow trenches, in many places of not more than plough depth. It leaked at almost every joint; its course could be traced across the fields by the smell of gas and the blighted line of vegetation. There were frequent explosions from the escaping gas; lives and property were much endangered. The city line was laid with lead joints, and had every device that engineering experience could suggest for its success, and was so constructed that it could be cleaned or repaired, and freed from liquids interfering with the flow of gas, without shutting off the supply—features the other pipe had not. The action of the city trustees had to endure the microscopic scrutiny of friend and foe. No one was able to show as to a single acre that the title was defective, or that it could have been bought for less, or to find any taint of a job in the construction of the pipe. A committee of the city council sat and probed for six weeks, but failed to find any evidence whatever to confirm the reported ” irregularities.”

What Toledo will save in one year by the difference between the actual cost at which its people can supply themselves and the price the private companies would have charged, to pay dividends on $6,000,000 of “capital,” is only part of the story. The profit of the city enterprise is to be estimated by its competitive effect upon the charge of the private companies. These have been kept down in Toledo much below the average of other towns, where they have been as high as 35 cents a thousand. If the city had not supplied a foot of gas this check on the private companies would make its pipe line still a good investment. The people, when it is in full operation, can pay the cost of the system complete out of the savings of a few years, then pay off the entire city debt, and have a large income left for public buildings, roads, parks. Or by reduction of price they can keep this sum in their pockets, where it will do quite as much for the general welfare as if it had been transferred to the bank accounts of non-residents.

The city, at the end of 1891, had 3299 3/4 acres of gas land. In March, 1892, forty five wells were giving over 50,000,000 cubic feet of gas, equal to 3500 tons of anthracite coal. Its income from the sale of gas was at the rate of $20,032 a month in winter, and $10,221 in summer. An investigation made in March, 1892, by a committee appointed by the mayor at the request of the city’s gas trustees, showed that an income could be counted on ($180,000) ample to pay all expenses ($128,120), including interest, rentals, and the cost of drilling new wells, and provide a small fund annually ($51,880) for the extinction of the bonded debt. The committee said: “We believe that if the gas plant is properly managed upon prudent business principles and methods, that it can be made a profitable investment for the city and her people; that the class who will derive the greatest benefit is the laboring class, who pay rent or taxes upon their little homes, and to whom the matter of cheap fuel is quite an item in the total amount of annual expenses; and we believe it to be the duty of every good citizen to aid and encourage this class.”

These were the results with a charge of 8 cents a thousand. Gas to the amount of $167,899 had been sold up to August 1, 1892. Between November, 1891, and August, 1892, the city earned on the million invested the sum of $150,000, or nearly one-ninth of the cost of the plant, and this at the low price of 8 cents a thousand feet. Unobstructed by its enemies and at the price charged by the private companies, 20 cents a thousand, the city would pay for its entire plant in less than three years.

To discourage the public from going forward with its pipe line the private companies “talked poor.” In an interview in the public press the president of the principal company said it had paid but 9 per cent. in dividends in two and a half years. The net earnings were stated to be “about 4 per cent. per annum on the capital,” $4,000,000;[11] for the smaller company they were figured out to be at the rate of a fraction less than 1 per cent. a year on its capital of $2,000, 000.[12] “We feel sore and hurt about it,” said the “direct representative” of the oil combination to the citizens’ committee; “we have seen no good return from our money.” “It has pretty nearly swamped us,” said the president of the company. The citizens of Toledo were shrewd enough to ask themselves how long their antagonists would have been likely to remain in a business which paid only 3 per cent., and was as “hazardous” and “short-lived” as they pictured it to be. Careful estimates made by close students of the question calculated that of the $6,000,000 of paper capital “invested” in the two companies which supplied Toledo and other cities, $1,125,000 was the proportion of actual cash devoted to Toledo. The receipts upon this Toledo investment in the two and three-quarters years between the opening of the business and the date at which, by the contract with the city, the council was to make new rates (June 30,1890), were, as nearly as can be calculated from the figures of their report, $1,300,000 greater than the expenses of the Toledo business. This is a profit of 115 per cent. In less than three years the total investment had been repaid by the profits, and, in addition, enough to have paid dividends of 5 per cent. a year. This was an estimate, but it was an estimate publicly made from the companies’ figures, and by a responsible man. It remained unchallenged at a time when every cranny of fact and fiction was being rummaged for missiles to fling at the people. When the citizens’ committee sought a reduction in price, the companies pointed to the small dividend their stockholders had had. In the face of the fact that they had received but a 3-per-cent. dividend the previous year, no business man, their spokesman said, could ask them to reduce their price. It is for such uses that shrewd men “water” stock. The surface of the capital is broadened, so that even large dividends can cover it only by being spread out very thin. This 3 per cent. a year was on $6,000,000 of dilution, representing a solid, at the most, of only $1,500,000. The balance sheets of the companies showed that the companies had paid small dividends for the additional reason that a large part of their receipts had been reinvested in lands, wells, and extensions of the pipes and plants.

The people are often assured that these false figures of capitalization are merely romantic and do them no harm, because charges must be governed by the “laws of trade.” One of the “laws of trade” that regulates the “market price” of such commodities as transportation, light, water, gas, furnished by the help of the public franchises, is the power of the public to regulate. This public power depends upon the public knowledge and the public disposition. To make the public believe that the profit of serving it has been only 3 per cent. a year, when it has been nearer 50 per cent., is to manipulate public opinion, the most potent of all the “laws of trade,” for a competing supply cannot be got easily, often not at all.

A committee of citizens were invited by the representatives of the gas companies to meet them to verify the statements of the companies as to the unprofitableness of the business, and the inexpediency of municipal self-supply. But when the committee wanted to know what had been the real cost of the private pipe lines, on the $6,000,000 nominal capital of which the people were expected to pay dividends, they could not get any satisfaction. The companies would only give an estimate. To the request for more definite information, the reply of both companies was, “We have not got the books of the contractors; we have never had them. We have no means of knowing the actual cost of the Toledo plant, or any books to show it.[13] We have no papers or documents in regard to the construction of this line.” It came to light later that one of the companies in the oil trust had constructed the pipe line for the gas company, and at a price approximating the large figures claimed. The company that built this pipe line is a ring within the oil and gas ring, always on hand for such contracts and at like margins of profit, and it is owned almost wholly by the principals of the combination.[14] The people—mostly Ohioans—who took the minority 40 per cent. Of stock of the gas company were really the “simple greens.” All that was paid for this construction by those who were members both of the inside ring and the gas company came back to them; their associates in the minority paid, but got nothing back. It was from the latter came the profits of this contract to the insiders.

The people of Dayton had a similar experience. Their natural-gas company demanded an advance to 25 cents a thousand, and met a committee of the people to prove that the demand was proper. But it would not let the people know what the actual investment was to make which good it sought to tax the people. The books containing the construction account were “not accessible.” “The actual cost to construct the plant is what we most desired to know,” the committee reported. As at Toledo, so at Dayton; all private enterprise would let its customer-subjects know was what it wanted them to pay; information to show what they ought to pay “was not accessible.” What the profits were elsewhere can be guessed at from the fact that in Pennsylvania $36 a year was charged in most of the towns for cooking-stoves. In Toledo the charge was $19.50 a year.

Almost every day after the pipe line had been decided on the people saw something done, showing how well founded their apprehensions had been. The power to discriminate in rates the people saw used by the private companies for selfish and anti-public purposes, precisely as they had foreseen it would be. When the fight for and against the city pipe line was on, one of the gas companies sought to enlist the strong men in their support by making them special rates, pursuing the tactics of divide and conquer. Manufacturers with influence useful in controlling public sentiment were conceded special rates. Others were given to understand that any lack of “loyalty” would be followed by punishment. So effective were these alternating methods of boodling and bulldozing that the council committee on gas, in a subsequent investigation, found it almost impossible to obtain any information from manufacturers as to their use of natural gas for fuel. What little they did secure was under injunctions of secrecy. The committee found that some were made to pay twice, some three, and some even four times as much as was paid by neighbors for like service. The only rule for charging seemed to be to favor those who had influence.” This was using municipal franchise just as the franchise of the highways had been used in their behalf by the railways. An assembly of divines could not be trusted with such power over their fellows.

After the Fostoria incident the people of Toledo had another illustration given them of how wisely they had builded. The gas supply of the people of Columbus, Ohio, was shut off arbitrarily and suddenly in midwinter—January, 1891—and they were informed that the company would supply them with no more gas unless the City Council would raise the price to 25 cents a thousand feet from 10 cents. The gas had not failed. The caverns that discharge gas at 25 cents a thousand will let it come just as freely at 10 cents. The council had fixed the price at 10 cents, and the company had accepted it. The demand for a higher price was close upon an increase in the capital stock of the Columbus company from $1,000,000 to $1,750,000. More stock called for more dividends, and this was one way to get it—to strike this sudden blow, and then to say, after the manner of Silas Wegg, “Undone for double the money!” It was for the power to do this at Toledo, to preserve the power of doing it everywhere else, that hell and earth were being moved in Toledo to prevent the people from serving themselves and setting an example to the rest of America. In the same way the gas was turned off at Sidney, Ohio, and not turned on again until, upon the application of the mayor, the company was ordered to do it by the courts. “There is a great deal of suffering here,” the press reported, “and it is feared that several deaths will result from exposure.”

The people did not fail to comprehend the significance of criticisms in the Toledo organ on the municipal water supply. Monopoly must go on conquering and to conquer, or be overborne by the ever-recuperating resentment which rises against it, freshened with each new day. Nature hates monopoly, says Emerson. The studied attack on the city water works was believed to be meant to prepare the people to intrust that as well as the gas supply to the trust’s “sound business men” and “private enterprise.”

Finding that the council would not bend to the demands as to rates, and that the people were too resolute to be in any way diverted from their pipe line, Toledo was given some such doses as could be ventured upon of the Fostoria and Columbus medicine. The company shut gas off from those who would not pay the increased rate. It deprived public institutions of their fuel. It refused to supply gas to a new public school whose building was planned for natural gas. As the city’s pipe line was not completed, the children had to go cold. The winter of 1891-2 was the first winter the city’s pipe line was in operation. With the first cold snap, at the end of November, great distress and danger were brought upon the people by a lawless act, done secretly by some unknown person to the city’s pipe line. One of the main pipes in the gas-field, through which flowed the product of two of the largest gas wells, was disconnected, so that its gas could no longer reach Toledo. Who did this was never discovered.[15]

Defeat, final and irrevocable, crowned the unvarying series of defeat which the private companies had suffered everywhere and in everything—in public meetings, in the Legislature, in the gas-fields, at the polls, in the courts, in the sale of the bonds, and in the competition with the city. The City Council of Toledo, advised by its lawyers that it could recover damages from those responsible for the losses brought upon the city by the opposition to its pipe line, has had suit brought for that purpose. April 14, l893, City Solicitor Read began proceedings to recover $1,000,000 damages from members of the oil combination and the various individuals who had been used as stalking-horses in the campaign. At the next meeting of the Common Council several citizens of the “influential” persuasion assisted the mayor in trying to coax and bully the council to abandon the suit, but without success. The council were threatened with a financial boycott to prevent the sale in future of any of the bonds of the city, but it refused to be terrorized.

April 8,1893, the natural-gas trustees of Toledo had the happiness of being able to give formal notice to the city auditor that no taxes need be levied to pay the interest on the gas bonds, as it “can easily be met from the revenues derived from the sale of natural gas.” The city pipe line was on a paying basis at last Toledo had vindicated its claim to be a free city. The completion of the enterprise had been delayed three years. A loss of not less than two million dollars had been laid on the city, but its victory was worth many times that. Toledo’s victory showed the country, in full and successful detail, a plan of campaign of which Columbus had merely given a hint. It was not a local affair, but one of even more than national importance, for the oil combination has invaded four continents. This struggle and its results of good omen will pass into duly recorded history as a warning and an encouragement to people everywhere who wish to lead the life of the commonwealth.

NOTE.—For the year ending December 31 1893 the city trustees report that they sold gas to the amount of $ 139 066. The city owns 5433 acres of gas territory and has 85 wells 73 miles of pipe outside the city and 91 miles in the city. Since the gas began to flow the sales have amounted to $388,540. Out of the receipts the debt has been reduced $60,000, besides refunding $67,000 to those who advanced the money for piping the streets, While doing this the plant has been considerably enlarged. The city accomplished this while charging the people but 15 cents a thousand, while the gas companies of the trust charged 25 cents a thousand. Had the city been permitted to act without obstruction, the cost of the gas plant would have been long since fully paid and the price of gas made still lower.[16]

[1] New York Sun of March 31, 1891.
[2] New York Tribune, April 23, 1889.
[3] From Life of William Lloyd Garrison, Told by His Children, vol. iii., ch. i., p. 12.
[4] Petition of the Isaac Harter Company vs. the Northwestern Ohio Natural Gas Company, Court of Common Pleas, Seneea County, Ohio, June 16, 1890.
[5] Annual Report of the Toledo Natural Gas Trustees, 1891, p. 6.
[6] See p. 250 and ch. xxxi.
[7] See p. 154.
[8] See p. 250.
[9] See p. 21.
[10] Annual Report of the Natural Gas Trustees of Toledo, 1891, p. 4.
[11] Report to Stockholders, Northwestern Nutural Gas Company, January, 1889.
[12] Report to Stockholders, Toledo Natural Gas, Company, January, 1889.
[13] See ch. xxxii.
[14] See p. 113.
[15] See chs. ix. and xxxi.
[16] See ch. xxx. and $1,294,467 up to the end of 1892. In the canvass before the election in 1889 their opponents declared that $4,000,000 would be required.

About Shawn P. Wilbur 2703 Articles
Independent scholar, translator and archivist.