Daily Kennebec journal., 1899-05-12
Daily ncnnebec 3ournaL
THE OPERATIONS OF TRUSTS.
Hon. J. W. Lee Explains Some Methods OF the
Standard Oil Co.

Washing ION, MAY IL ne lnuuStrl3l
commission, today, heard the first Wit
ness to be called in connection with its
inquiry into the operations OF trusts.
The witness was Hon. James w. Lee of
Pittsburg. attorney for several pipe
line and oil companies, and formerly
A state senator of Pennsylvania Mr.
Lees testimony was directed especial
" against the Standard Oil Co. Speak
ing of the effect of trusts upon the
consumer, Mr.. Lee said the tendency
was to increase prices until they be-
come extortionate. Trusts were organ
lied to secure monopoly and when
this was secured by closing up rival
establishment they We're in position IL
fix prices, which We're according to his
observation, generally increased in or
der to permit dividends on watered
stock. This had been eminently true
of the Standard Oil Co.
As',an illustration he said that when
the Pure Oil Co. in which the witness
is interested, went into the field in New
York in 80. they found the Standard
selling oil at IL cents a gallon. The
price was almost Immediately reduced
to II cents and had remained there
since, the object being to drive out the
rival. The first price was inordinately
high but the latter was ruinously low,
and while the Independent company
had met the reduction it had done so
at a loss. He thought the competition
had resulted in a saving of fully $1,000
600 to the people of Greater New York.
The condition of affairs existed at other
competitive points.
the Standard Oil Co. was still getting
rebates from the railroad companies
despite the law. and he thought this
was accomplished by paying exorbitani
prices for lubricating oil. He estima-
ted that the Standard Co. had within
the past % years absorbed about 100
independent companies, but that the
companies with which he was connect
ed had refused to sell al an advance
of ~ per cent. in cost when they We're
about to be closed out by the sheriff
This refusal had been dictated largely
by sentiment. Now, however, the in
dependent companies were doing a
profitable business. He knew of sew
eral refneries which had been purchas-
cd at high prices by the Standard Go.
and then closed. He had also heard
main idle, but he had no personal in
formation on this subject.
Mr.. Lee said the Standard Oil Co. had
made an effort to prevent the extension
of the business of the independent
companies to foreign markets by buy
ing up the tankage at given points and
by selling at lower prices than pre-
vailed even in the United States. Still
~, sx,ln mi. ,1,1
to compete abroad largely, because in
Great Britain and Germany and in
some other countries. competition was
preserved to a greater extent than in
the United States. The profits made
abroad were what enabled the inde-
pendent companies to continue in exist
ence. and the business in this country
alone was unprofitable-
Mr.. Lees testimony at the afternoon
session of the commission was devoted
to the effect of trusts upon the pro-
ducer and upon labor. dealing again eX-
clusively with the oil business. He said
the aim of the trusts was to get a COM
plete monopoly of business. fixing the
price as it might please and leaving
little or no profit to the producer. In
illustration, he said. the Standard Oil
o.
crude oil at 65 cents per barrel for a
year and that for 10 years prior to 1895
the price paid had averaged only SO
cents per barrel, whereas the average
cost of production was not less than 81.
He further expressed the opinion that
the counties in Pennsylvania which
had produced all the oil turned out in
that state amounted to about 500, 100000
IVA L. off All
Still there were some wells which were
largely remunerative due to their high
degree Of productiveness. Many of the
wells. however, produced very little.
or the $4,000 wells in operation $4,000
produced less than half a barrel day
each He thought that if there had
been 50 refiners instead of the Stand
ard Co. the market would have been
lust as extensive. the consumer would
have gotten his oil as cheaply and the
producer would have been much better
off.
Where has the balance gomez asked
Mr Livingston
II think" the witness replied. the
Standard Oil co. could explain it. The
understanding is that it has realized
about S5O0OO0, 900" kA
NE. Lee was quite cOnIiueHI IHdt tue
general effect OF the trusts was in
furious to labor. The effect was to de-
prive labOrers of competition of chance
for employment when thrown OUT of
work, and to make them subservient
and poorer citizens. Speaking specifi-
caHy Of the Standard Co.'S. treatment
fits employees he said they were well
paid and a certain glass Of them re-
ceived very high .satarie s:s.Fsstill the ul-
innate effect OF anyjfnoHopoly must be
Injurious to labor ~ -
AS a means of prevention of trusts
Mr.. Lee suggested n law making de-
structive competition a criminal Of