Evening star. [volume] (Washington, D.C.) 1854-1972, 1906-05-04

thereof THEODORE ROOSEVELT.
The White House. May 4. 1903.
Commissioner Garfeld's Report.
DEPARTMENT OF COMMERCE.
AND LABOR,
BUREAU OF CORPORATIONS.
WASHINGTON, May 2, 1905.
Sir: have the honor to submit the part
of the report on the oil industry which has
to do with the subject of transportation
and freight rates.
House resolution No. 400 passed Febru-
ary 10, 1905, directed particular attention
to the condition of the Kansas oil field. The
study of the oil industry which had there
tofore been made by the bureau showed
that special report upon the conditions
In the Kansas field would not be advisable
A report on any special field would of nee
essity be unfair to both the producers and
the refiners for the reason that the purely
local conditions do not by any means de-
termine the price of either crude oil or it's
products or afford proper basis for un-
derstanding the conditions of the industry.
Therefore. a general and very extensive
investigation has been conducted, covering
the following subjects:
1. The crude oil production in the United
States and its relation to the words sup
ply; the prices and methods of purchase.
2. The use, development and control OF
pipe lines.
8. Refining of oil: the control of refiner-
81,
prices Of petroleum products.
4. The organization. ownership, and re-
lation of the companies engaged in the
production, manufacture, and distribution
of Oil
3. The competitive methods used In the
production and sale of oil.
8. Transportation and freight rates.
Z. Foreign trade and conditions and their
relation to the domestic industry.
1 have personally visited nearly all OF
the great fields and have been In comnu-
n1cadon, either personally or through the
agents of the bureau. with many hundred
producers and practically all the refiners
and transportation agencies engaged in the
distribution Of oil. special agent of the
buerau was sent to Europe to study at
first hand the conditions in foreign pro-
ducing fields and distributing markets. The
facts obtained have in every feasible way
been verified by examination of the original
sources of information.
Material Already Collected.
By far the greater part of the material
necessary for the completion of the entire
report has been COLLECTED. The preliminary
study of this material showed that the
most important subject was transportation,
because the cost of transportation is very
large percentage of the tota, cost to the
consumer of the finished product. and
hence a most important factor in competi-
ton.
The control of the Standard OIL Company
over the entire oil industry is so great as
to require special study of It's relations
TO transportation companies
therefore first submit the accompany
ing report upon the subject of railway
transportation and freight rates. As it
necessarily covers many details | beg to
invite your attention to the following sum-
mary of its more prominent features
The manufacture of refined oil, commonly
known as Kerosene, is about 26,00O, 600 bar
rels annually, of which the Standard Oil
Company directly and indirectly controls
about 230O0,000. 1t also controls approxi-
mately the same proportion of the other
nnished products of petroleum.
The refineries owned or controlled by the
Standard OH Company are located near New
York, Philadelphia, Baltimore, Chicago
Kansas City. in western New York and
Pennsylvania, in West Virginia, Ohio, Kan
Eas, Colorado, California and Texas. It's
largest refineries are located at the great
centers of distribution, which are connected
by pipe lines with the crude oil fields. The
refined products are carried by rail and
water. The Independent reineries-that is
those not owned or controlled by the Stand
ard OIL Company-are located. with a very
few exceptions, at or near the crude oil
fields. This difference of location, as will be
seen later, is of Importance
The Standard claims that the location OF
its ref1neries and the use of pipe lines are
natural advantages to which 1t is Justly en-
titled by reason Of the energy and foresight
of its managers. While in measure that
Is true, II must not be forgotten that these
advantages were In part obtained by means
of unfair competitive methods after years
of fierce Industrial strife.
The development of the pipe line system
by the Standard OIL Company was the result
of special agreements with railroad COM
panies. Furthermore, those so-called nat
ural advantages have been and are being
greatly increased by Determinations IN
freight rates, both published and secret, in
terstate and state, which give the Standard
monopolstic control In the greater portion
of the country, and which so limit competi-
tion as to practically prevent the extension
of the business of any independent to
point which even remotely endangers the
supremacy of the Standard.
An Immediate result of this delimitation
of the competitive area is shown by the
prices Of ordinary Illuminating oil through
out the country. After deducting the
freight rate the price of such oil Is usually
from 2 cents to cents a gallon higher In
the non-competltive than in the competitive
fields. A reasonable profit upon refined Oil
is about one-half a cent per gallon. 1t is
clear that exorbitant profits obtained In
the non-competitive fields This monopo-
istic control extends from the well of the
producer TO the door step of the consumer.
The facts regarding freight rates have
been obtained by the examination of thou
sands of entries upon railroad records.
With but single important exception, rail-
road companies have, upon application of
the bureau of corporations, given access to
records of both state and interstate busi-
ness. The New York Central Company
fused for itself and its affiliated lines to give
access to records of state rates At the
beginning Of this investigation the officials
of the Standard OIL Company stated that
that company had not obtained any rebate
or other transportation discrimination as
against competitors. They invited the most
careful investigation of the subject
Upon the request of its attorney, all the
essential facts discovered by this bureau
were presented to the company at the close
Of the investigation, and an exhaustive
statement relating thereto was made by its
chief traffic officer. There was no denial of
the facts found, but explanations of par
eicuiar situations were offered, and 1t was
urged that the facts did not show any viola
ton by the Standard of the letter or spirit
of the interstate commerce law A most
careful review of the facts and the explana-
tions leads to the following conclusion:
Secret Rates and other Illegal Dis
ordinations.
The Standard Oil Company has habitually
received from the railroads, and is now re-
ceiving, secret rates and other unjust and
Illegal determinations.
During 1904 the Standard saved about