The Hepburn Committee facts for kids

The Hepburn Committee was a special group created in 1879 by a law passed by the New York State Legislature. Its main job was to look into how railroads were doing business. They wanted to find out if railroads were giving special discounts, called rebates, on shipping prices to their biggest customers. These discounts could be as much as 25%! This meant that smaller companies had to pay much higher prices to ship their goods, which gave a big unfair advantage to some huge companies, like John D. Rockefeller's Standard Oil Company. Many business owners who weren't connected to the oil industry had pushed for this investigation.

Before the committee started its work, most people didn't know how much control and power Standard Oil had over many oil refineries and pipelines that seemed to be separate. Some experts say that only about a dozen people inside Standard Oil knew the full extent of the company's operations.

What Was the Hepburn Committee?

The Hepburn Committee was named after A. Barton Hepburn, who was asked by the New York State government to lead this important investigation. The goal was to uncover unfair business practices in the railroad industry.

Why Was the Committee Formed?

The committee was formed because many smaller businesses felt that the system was rigged against them. They believed that large companies were getting secret deals from the railroads, making it impossible for smaller businesses to compete fairly.

Unfair Shipping Prices

The main concern was about "freight rate rebates." Imagine a railroad charging everyone $100 to ship a barrel of oil. But then, they secretly give a big company like Standard Oil $25 back, so Standard Oil only pays $75. This meant that smaller companies were paying the full $100, which was a huge disadvantage. This practice made it very hard for smaller businesses to succeed.

What Did the Committee Discover?

The committee's lawyer, Simon Sterne, questioned people from major railroads like the Erie Railroad and the New York Central Railroad. They found out that at least half of their long-distance shipping deals included these rebates. A lot of this special treatment went to Standard Oil.

Standard Oil's Role

Because of these findings, the committee started to focus more on Standard Oil itself. They questioned John Dustin Archbold, who was the president of a company called Acme Oil. He first said that Acme Oil was not connected to Standard Oil. But then, he admitted that he was also a director for Standard Oil. This showed how Standard Oil secretly controlled many different companies.

What Happened After the Report?

The Hepburn Committee released its final report. It strongly criticized the railroads for their rebate policies and used Standard Oil as a clear example of a company that benefited unfairly. However, this criticism didn't really hurt Standard Oil much. By the time the report came out, Standard Oil had already started using long-distance oil pipelines as their main way to transport oil, which was even better for them than railroad shipping.