The Birmingham age-herald., 1906-01-01

l LII the llne-Qp or iile AlilAtNit Niao Ns-N-'
 
 the Standard Oil company is conducted l by subsidiary corporations the custom being to allow few local capitalists Tn
 each case to hold a small amount ot stock | in these subsidiary companies. ms l gives an appearance of legitimate cohl-
 mercial enterprises It also serves 10
 ward off hostile legislation by municipail- | ties and states The local capitalists give a neighborhood flavor to the enterprise, and in many cases they claim 10 act merely as the customers of the Stanuard l Oil company, and their owners and stoek- holders frequently talk loudly about the monopolistic methods of Rockefeller ana | his associates.
 Tn a great many cases local politicians and men of national reputation have been permitted to hold small blocks Of stock in these subsidiary companies. This IS said 1 to be particularly true in New York' New Jersey, Rhode Island and Pennsylvania l In each case, however, the parent com pany, the New Jersey corporation, whlen is the real Standard oil company retains the actual control. The local capitalists are brought in for their names only. They seldom have much at stake and never have anything to say. AS rue, the Standard oil company. through It's New Jersey organization, retains for ltseiI nearly B per cent or the sloCh Vi eeii these subsidiary corporations.
 How the Profit Varies.
 In the tangle of all this multitude of corporate agencies the government agents have discovered that the oil business pays a great deal better in one part or the country than 1t does in another For in- stance, it Is a costly concern in Kansas where the aroused people have to be fought from day to day. In New fork, however, where corporate influence on the legislature and the state government IS taken as matter of course, and where l the market is more compact, the busl- ness is immensely profitable.
 1 Taking the country over it will be shown by Commissioner Garfeld's report i that the profit turned in to the holding company in New Jersey will average 4o to 50 per cent on the actual capital in- vested. That is to say, after making i liberal estimate of the cost of all the refineries, tank llnes tank cars, office ex- penses, administrative outputs, and sim far items. the profit amounts to nearly half of all the money the Standard Oll 1 company could be sold for on the basis of It's tangible assets.
 Profits 100 Per Cent In New York. l This average. large as it is, would be still greater were 1t not for the necessity which the system Is under of controlling the production and distribution of oil at all hazards. In New York state, for in- stance, the figures show, and the govern ment report will so declare, l think that the five subsidiary companies of recent years turned over to the holding company in New Jersey an average Of l0o per cent dividend on it's entire capital stock. In some other states where local compe- tition has had to be met, there has been no dividend at all, but these extremes nevertheless permit an average net reve- nue of about half of all the money in- vested every year, and that Is the meas ure of tax which the public pays for per hitting monopolies. No railroad, however prosperous, no beef trust, or steel trust can make such a showing of net revenue.
 With this network of subsidiary com- panies the bogus independent concerns, organized to choke off competition. are so closely affiliated that the government detectives frequently have been unable to draw the line even to their own satisfac- ton, to say nothing of securing satis- factory legal evidence.
 How Competition Is Throttled
 In some towns there is an honest inde- pendent company fighting the Standard oil in a small way. Then there is an in dependent" company also apparently l fighting the Standard oil. but owned and | operated by 'the system.' These two con cerns fight each other a good deal more than they fight Standard Oil, and the big monopoly goes along apparently indif- ferent to the failure or success of it's rivals. In many cases 1t has been found almost impossible to determine which con- cern was independent and which was the mere creature of the monopoly. Even where 1t has been shown beyond all question that a certain local oil com pany is acting wholly independent of the l Standard Oil crowd there is discovered a | ot,.a, fctn Ifna to civ l any of the independent men have been led to believe that the Standard oil mag mates are quite" willing to tolerate insig- nificant competition so long as 1t does not become too aggressive. Independent operators appealed to by government agents frequently have refused to testify to the alleged Illegal operations of Stand ard Oil. They are afraid of the system and honestly believe it can do them more harm than the government can possibly do them good.
 It Is strange but true that these ndepen- dent operators, unquestioned rivals Of Standard Oil are extremely pessimistic as to the investigation being conducted by 1 the government, and they declare without hesitation that in attempting to throw down the majesty of Standard oil, Presi- dent Roosevelt has bitten off more than he can chew"
 Built Up By Rebates. l have shown already in previous dis | patches that the Standard Oil monopoly was originated by and built up through a system of secret rebates from the rail- road companies In the other days when oil was worth $20 or more barrel it was an exceedingly profitable commodity for the transportation companies to handle. The New YorS Central and the Pennsyl- vania almost broke their necks in their rivalry to build branch roads as near as possible to oil City. At first the teamsters who hauled the oil in barrels from the wells to the railroads reaped the largest percentage of the profit. Then the rails were pushed into the oil region
 itself, and from that day there was built up the theory that oil could not be handled at all unless the owners were given a secret rebate, the extent of which depended largely upon the anxiety of the railroad manager to secure business or the persistency of the shipper. Today the Standard Oil company is becoming more and more independent of the railroads. It has financial interests as a matter of protection in most of the trunk lines in the United States. It has accumulated out of its profits such an enormous capital that it has become the practical dictator of Wall street. Through their combination of banks trust companies. railroads. and other enter prises the master men of Standard Oil can dictate freight rates. In whole sec tions of the country they have crushed out competition and there 1t is not neces- sary to have rebates, because the rail- road is forced to make open tariffs by which oil is carried at the barest margin of profit.