I regret that Mrs. Backus did
not take at least part of her pay in Standard certificates, as we
suggested she should do.

THE QUESTION OF REBATES

Of all the subjects which seem to have attracted the attention of the
public to the affairs of the Standard Oil Company, the matter of
rebates from railroads has perhaps been uppermost. The Standard Oil
Company of Ohio, of which I was president, did receive rebates from
the railroads prior to 1880, but received no advantages for which it
did not give full compensation. The reason for rebates was that such
was the railroads' method of business. A public rate was made and
collected by the railroad companies, but, so far as my knowledge
extends, was seldom retained in full; a portion of it was repaid to
the shippers as a rebate. By this method the real rate of freight
which any shipper paid was not known by his competitors nor by other
railroad companies, the amount being a matter of bargain with the
carrying company. Each shipper made the best bargain that he could,
but whether he was doing better than his competitor was only a matter
of conjecture. Much depended upon whether the shipper had the
advantage of competition of carriers.

The Standard Oil Company of Ohio, being situated at Cleveland, had the
advantage of different carrying lines, as well as of water
transportation in the summer; taking advantage of those facilities, it
made the best bargains possible for its freights. Other companies
sought to do the same. The Standard gave advantages to the railroads
for the purpose of reducing the cost of transportation of freight. It
offered freights in large quantity, car-loads and train-loads. It
furnished loading facilities and discharging facilities at great cost.
It provided regular traffic, so that a railroad could conduct its
transportation to the best advantage and use its equipment to the full
extent of its hauling capacity without waiting for the refiner's
convenience. It exempted railroads from liability for fire and carried
its own insurance. It provided at its own expense terminal facilities
which permitted economies in handling. For these services it obtained
contracts for special allowances on freights.

But notwithstanding these special allowances, this traffic from the
Standard Oil Company was far more profitable to the railroad companies
than the smaller and irregular traffic, which might have paid a higher
rate.

To understand the situation which affe