by the Commissioner, in so far as they are concerned, are an unconstitutional attempt to impress a public use upon private property, without making proper compensation therefor. The refusal of certain of the companies to comply with the provisions of the new federal law regarding pipe lines, is treated by the Commissioner as the expression, by these companies, of their contention that they are not common carriers. If their contention is successful, a large proportion of the acts which the Commissioner regards as violations of law will, in fact, appear entirely lawful.

Pipe line competition, where it exists, is not actually conducted by the pipe lines themselves but by the oil buyers who are the principal users of the respective lines. The implication, which the Commissioner diffuses throughout his report, that the pipe lines of the independent companies and of the Standard Oil Company purchase the oil which they receive into their pipes is, in the general instance, not strictly the fact. In competitive districts, the buyers that use each pipe line offer higher prices for oil than in non-competitive districts, in order to get the business and perhaps to force the opposing company to withdraw from the field. This practice of paying premiums in competitive localities, which the Commissioner regards as quite unfair, is the most usual weapon of competition everywhere in the business world.

Until the courts have determined in what respect and to what extent the pipe line business is that of a common carrier, and have suggested the mode of overcoming the natural obstacles in the way of common carriage of oil by pipe line, and have directed that the features of a private business which now characterize some pipe line companies be eradicated, the pipe line companies cannot fairly be held to the same obligations that rest upon the railroads. The Commissioner charges that certain pipe lines controlled or owned by the Standard Oil Company have refused to discharge the duties of a common carrier. He states that such a pipe line company of the Standard Oil Company and also the Pure Oil Company, an independent company, both refused, in one instance, to transport oil for an independent refiner. He declares that an independent refiner once asked such a pipe line of the Standard Oil Company to make connections with his refinery,

and was refused. He quotes several independent refiners for the proposition that the purchase of pipe line certificates fell into disuse because of the difficulty in obtaining delivery of oil at desired points. He says that, on several occasions, the Standard Oil Company refused to establish a delivery station in its gathering lines, and insisted on making delivery only at its regular stations. Assuming for the moment that the pipe lines were common carriers, it must still be shown that their refusal was unreasonable. If, however, as may, perhaps, be the fact, the pipe lines were not common carriers, such refusal was quite within their legal rights. He cites an instance in which the Standard Oil Company has refused to sell oil to an independent refiner. He admits, however, that the Standard Oil Company very generally sells oil to independent refiners. In case the

subsidiary company of the Standard Oil Company, of which he complains in this instance, was merely a pipe line company transporting oil for others, and not owning the oil that it carried, it clearly had neither the duty nor the power to sell such oil. No information upon these points can be derived from the report.

The real quality of the offense which the Commissioner charges against the Standard Oil Company appears in the language with which he apportions, between that company and the independent companies, the blame for existing evils in the pipe line situation. Regarding the payment of premiums for oil in competitive localities, he says:-"It has sometimes been urged in justification of the policy of the Standard that independent pipe lines in some cases begin the payment of premiums, first. This is true, but the motive which actuates the independent is quite different from that which actuates the Standard. New independent pipe lines often find that producers, being accustomed to dealing with the Standard and having greater confidence in its credit and in its permanence, hesitate to sell their oil to the competitor. Producers quite frequently express a positive fear to discontinue sale to the Standard, lest in case the independent pipe line should subsequently withdraw, the Standard might punish them by refusing to take their oil, or in other ways. To overcome this disposition of the producers, independent pipe lines are often forced to pay small premiums in

order to get any oil at all. The Standard in paying premiums, however, usually has in view nothing less than the extermination of competition."

The Commissioner reveals still more clearly his basis of judgment in discussing the refusal by the pipe lines to discharge the duties of common carriers :-"There is undoubtedly a material difference between the position of the Producers' and Refiners' Oil Company and that of the Standard Oil Company. What might properly be demanded of the great corporation might be a grievous injustice to the smaller so long as the former failed to perform its duty. The independent company has only a single 6-inch trunk pipe line; the Standard has several 6 and 8-inch trunk lines. The Standard's pipe lines in the Appalachian and Lima-Indiana fields handle twenty times as much crude oil as the Producers' and Refiners' line. The independent refiners could do little to hamper the Standard's refineries in obtaining a supply of crude oil through the Standard's pipe lines. The Standard could almost completely prevent the independents from getting crude oil through their one small system. The officers of the Producers' and Refiners' Oil Company say further, with reference both to its refusal to sell crude oil to certain refiners and its refusal to transport for outsiders, that the capacity of the pipe line has long been taxed to its utmost to supply the needs of the refineries with which it was already connected and whose owners are largely stockholders in the company."

In so far as the Commissioner assumes that the pipe line companies themselves generally purchase the 'oil which they receive into their pipes, his conclusions must be, to a certain degree, discredited, as proceeding upon an assumption which strictly is not true. "The motive which actuates the independent," it is also submitted, is not in quality "different from that which actuates the Standard." Like all bidders in an open market, both "pay small premiums in order to get any oil at all." Two buyers cannot purchase the same thing at the same time. The buyer who would succeed in making a purchase must necessarily overcome the competition of his rival. Both the Standard Oil Company and the purchasers of oil to be carried by the

independent pipe lines, therefore, in paying premiums for oil have "in view nothing else than the extermination of competition." A new rule of business conduct is contained in the dictum that "what might properly be demanded of the great corporation might be a grievous injustice to the smaller so long as the former failed to perform its duty." The "grievous injustice" of performing his legal duty has hitherto not been spared anybody because of his size. Mere bigness has never been a sufficient cause for imposing the obligation of public service. The possibility that a public service company may be patronized by customers not its friends has not, until now, been a good defense. The standard of conduct raised by the Commissioner for the Standard Oil Company seems not only in advance of the law, but also in advance of the standard by which its smaller rivals are judged. The trend of public opinion regarding the ethics of trust competition may some day lead to the establishment of noblesse oblige as the law of business, and the disarmament of every great power in the industrial world, and the abandonment of every weapon of competition to inferior industrial organizations. The rule of conduct laid down by the Commissioner is certainly prophetic of such an era. GILBERT HOLLAND MONTAGUE.

New York City.

THE PARADOX OF GOVERNOR PENNYPACKER.

CONTENTS.

Character of Governor Pennypacker, p. 172; his relation to Quay, p. 173 ; his appointments, p. 174; the pure food crusade, p. 175; his conscientiousness, p. 176; the Libel bill and muzzling of the press, p. 177; the governor plays into the hands of the machine through the Ripper bills, p. 180; explanation of his action, p. 181; his numerous veto messages, and faithfulness in protecting public interests, p. 183; his notable work for reform in connection with the special session of 1906, p. 189; his relation to the capitol scandal, p. 191.

OVERNOR PENNYPACKER of Pennsylvania was cer

Gov

tainly the most severely and the most persistently criticised chief executive that the Commonwealth has had since the middle of the 19th century. He left the office last January with a firmly established reputation for honesty. He ran counter to public opinion as expressed in the newspapers. He had a strong hold on the affection and respect of the common people. Very often I have heard newspaper men, connected with the very papers that were indulging in the most extreme criticism of him, testify (privately) in unequivocal terms to his integrity and his devotion to public interests.

This, then, is the paradox of Governor Pennypacker. What is the explanation? His career as Chief Magistrate of Pennsylvania affords an interesting phase of the much-mooted question of the wisdom of electing judges to administrative office. For thirteen years Governor Pennypacker was a highly honored member of the judiciary of Philadelphia County, serving for the greater part of that period as President Judge of the Court of Common Pleas No. 2. He had a well deserved reputation as a capable and efficient nisi prius judge, and his opinions as a member of the Court were carefully prepared and disclosed the workings of a judicial mind. Very seldom indeed did the appellate courts overrule his decisions.

While he was a man of profound convictions and strong prejudices for instance, his anti-British attitude and pro-Boer