The San Francisco call., 1899-05-12

w NASdlNCIO4Nt May LINE 1nQQS-
trial Commission to-day heard the first
witness to be called in connection with
it's inquiry into the operation Of trusts.
The witness was Hon. James w. Lee of
Pittsburg, attorney for several pipe
lines and oil companies, and formerly
a State Senator of Pennsylvania. Mr..
Lees testimony was directed mainly
against the Standard Oil Company.
Speaking of the effect of trusts upon
the customer AIr. Lee said the tendency
was TO increase prices until they be-
came extortionate. Trusts were organ
ICED TO secure a monopoly, and when
this was secured by closing up rival es-
adjustments they were in a position 10
fix prices, which were, according to his
observation, generally increased in or
der to permit dividends on watered
stock. This had been eminently true
OF the Standard Oil Company. AS an
Illustration, he said that when the Pure
Oil Company, in which the witness is
interested. went into the field IN New
York. in 1896, it found the Standard
selling oil at 91a cents a gallon. The
price was almost Immediately reduced
10 532 cents. and remained there since
the object being TO drive out the rival.
The first price was inOrdinately high,
but the latter was ruinously low, ana
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 $5,000,0 600
TO the people of Greater New York. The
same condition Of affairs existed at
competitive points.
Mr.. Lee expressed the opinion that
the Standard Company was still get
ting rebates from the railroad com
panies, despite the law, and he thought
this was accomplished by paying eX-
Orbitant prices for lubricaJing oil. He
estimated that the Standard Company
had within the past twenty years alb
sOrbed about 100 independent COM
panies, but that the companies with
which he was connected had refused to
sell at an advance Of l2l2 per cent in
cost when they were about 10 be closed
by the Sheriff This refusal had been
dictated largely by sentiment Now.
however, the independent companies
were doing a profitable business.
He knew of several refiuerieS which
had been purchased at nigh prices by
the Standard Company. and then had
been shut down. He had also heard
that men had received d bonus to re-
main idle but he had no personal in
formation on this subject Mr.. Lee said
the Standard Oil Company had made
an effort to prevent the extension Of
the business of the independent com
panies to foreign markets by buying
up the tankage at given points and by
selling at lower prices than prevailed
even in the United States. Still the
independent companies We're able to
compete abroad largely, because in
Great Britain and in Germany and in
some other countries competition was
preserved to a greater extent than in
the United States In Germany no one
was allowed TO do business at a loss.
The profit made abroad was what en-
abled the Independent companies to
continue in existence, as the business
in this country alone was unavoidable.
Mr.. Lee also testified to the effect Of
trusts upon the producer and upon
labor. dealing exclusively with the oil
business. He said the aim of the
trust was to get a complete monOpo-
~ Of business, fixing the price as il
pleased and leaving little or no profit
to the producer AS an Illustration he
said the Standard Oil Company had
maintained the price paid for crude oil
at 65 cents per barrel for year and
that for the ten years prior to 1895 the
price paid had averaged only so cents
per barrel whereas the average cost of
production was not less than ST.
He further expressed the opinion that
the counties in Pennsylvania which had
produced all the oil turned out in that
State, amounting to about 10000 600
barrels, were worse off for it's output.
Still there We're some wells which were
remuneratiVe. due to their high degree
Of prOduCtiVeness. As q matter of fact
however, many of the wells produced
very little OF the 10000 wells in opera
ton 25.00O produced less than half a
barrel a day each. He thought if there
had been fifty refneries instead of the
Standard Company the market would
have been just as extensive, the con
sumer would have secured his oil as
Cheaply and the producer would have
been much better off
Where has the balance gomez" asked
Mr.. Livingston
Il think" the witness replied, "the
Standard Oil Company could explain
that. The understanding is that it has
realized about $500 900, ,00O"
Mr.. Lee was quite confident that the
general effect Of trusts was injurious
to labor The effect was to deprive
labOrers Of competition, Of chances for
employment when thrown out Of work
and to make them subservient and
poorer citizens. Speaking specifically
Of the Standard Oil COmpany's treat
ment of its employees, he said they were
well paid and certain class of them
receive very high salaries. Stil, the
ultimate effect of any monopoly must
be injurious to labor.
AS a means Of prevention of trusts
Mr.. Lee suggested a law making de-
structive competition a criminal Of
fense He thought the fear of imprison-
ment would intimidate some of them.
The law could be passed by the States
and in case Of prosecution, prices
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