The Washington herald., 1907-08-12
CONTINUED FROM PAGE ONE.

I 10 create the impression that the recenI
decline in prices Of American illuminating
/ oil abroad was necessitated by an over
supply of that product They have also
claimed that there has been severe com
petition against the American product
/ from the oils Of Russia and other foreign
countries. and that the reductions in ex-
port and foreign prices were necessary TO
retain the American export trade.
Arguments Not Well Founded,
Neither Of these arguments is well
| founded. There was no supply OF ilIumi-
mating oil during the years 1904 and 1905.
at which time foreign prices were being
| severely cut. The exports from the
United States during 1901 were less than
in 1901 and 1902. The exports from the
five important oil-producing countries
combined showed little more than a nor
nal Increase. The worlds production in
tlSS was less than IN 1904 The exports
from the five principal countries COM
bined in 1905 were more than per cent
less than in 1904
The conditions OF supply. therefore.
do not excuse the extraordinary decline
In foreign prices in 1905, and the resulting
discrimination against the American con-
sumer. This decline was not necessitated
/ by an oversuppiy Of oil. In fact, ths
movement Of prices was precisely the op-
posite Of that which would haze been
expected from the changes in supply.
The falsity of the Standards argu-
ments is further demonstrated by the fact
| that during 1904 and 1905, a period when
the Standard claims that an oversupply
existed. that company actually took large
quantities OF oil in Russia 10 supply its
trade In Europe and the Orient Having
monopoly at home, Il has charged such
] prices as it could thereby extOrt and
The American consumer has had to pay
these prices.
Meeting competition abroad, II has
given the foreign consumer enormously
lower prices. and 1t has used the profits
made at home to maintain its position
abroad, so that the American consumer
has been severely Disseminated against
for the purpose of maintaining not the
dominance Of American export trade. but
the dominance of a particular combina-
tion which has used it power frequently
and cOnspicuOusly to the disadvantage of
the American public"
System of Determination.
Commissioner Smith declares that a. .stin
more important and extraordinary state
OF affairs appears IN the conditions OF
prices in the United States. a study Of
the Standards price policy has brought to
light remarkable system of discrimina-
tions In prices for the same products in
different lpcalities throughout the coun-
try. He points out that there IS substan-
TALLY no general market price for petro-
leum products especially Illuminating oil
The Standard sells most of its iuumi-
mating oil and gasolinel in the United
States directly to retail dealers at their
own towns. delivered mainly by tank
wagons. Consequently, the prices are. as
a rule, purely local prices. This system
Of distribution and price making. it is
charged, puts It in the power OF the
Standard to vary its price, according TO
local conditions. without disturbing prices
in other localities. On this point the Com
missioner of. Corporations says:
The significance 81 the extraordinary
differences in prices charged In many diff
ferent sections 81 the country or in diff
ferent towns can be appreciated only in
the light OF the fact that very small
gin Of profit on the investment In refining
and marketing of petroleum products A
difference Of about seven mills per gallon
ina the price of illuminating oil may
mean difference between a profit OF 10
per sent on investment in refining and
marketing and TO profit at all. But the
actual differences In the Standards prices
among competitive and noncOmpetitive
towns and areas. after making all allow
ances for differences In cost Of production
and distributing, often amount to several
cents Per gallon.
Has Tremendous Weapon.
a combination which can command the
profits that these figures imply over large
areas has therefore obviously a tremen-
dous weapon when It enters on aggressive
price-cutting against independent con-
Germs.
The most accurate and complete data
was obtained by the bureau on this sub !
ject directly from the records of the
Waters-Pierce Oil Company, a Standard
concern. The territory Of that company
includes Arkansas, Oklahoma, Indian Ter
ritory, Texas. and part of Missouri and
louisiana. IN 1890 the profits varied from
Os cent In the St. Louis division of this
company to cents per gallon in the
North Texas division.
Taking the average prices for the sew
eral States in December. 1904. the lowest /
price appears in Delaware, II cents per
gallon, freight deducted, and the highest /
in Colorado. 16.2 cents per gallon, freight /
deducted, or more than twice as high. /
&c
average State prices. even after deducting /
freight rates. arising from the uncer- /
tainty as to the relative cost of manu- /
featuring tile oil sold in different states. /
This difficulty, however, may be /
avoided by comparing only those States
which are supplied from a single refinery !
or from a group of rehneries using the /
same crude oil and having a substantial |
similarity Of conditions.
Most striking Instance.
"One OF the most striking instances Is
in California, where the Standard carries /
oil from its great refinery. near San Fran
cisco. several hundred miles by water
and rail, and sells it in Southern canfor-
MIA for several cents less than is charged
for the same oil In San Francisco.
The average price, freight deducted.
for Southern California, in December.
1904. was 70 cents. and the average for
the northern part of the State was 124
cents. Oregon. supplied from the same
source. paid the price Of 1873 cents, freight
deducted. and the State of Washington.
I57 cents.
That these differences are not due to
differences in cost Of marketing arising
from the density of popalation is shown
by taking the prices for large cities in
different parts OF the country.
These Determinations in prices were
largely made rnossfble h,t tho ,r-iaorrrnn.1