The sun. [volume] (New York [N.Y.]) 1833-1916, 1907-08-05

year. particularly In Illuminating oil. the
most important product,
The report says that the Standard ap-
FEARS TO have taken advantage OF the
precedent established the preceding winter
10 excuse an extraordinary high level OF
Jriccs. The average margin for iItumi-
mating oil during the first half OF 1904 was
nearly IA high as during the first half OF
1903. Toward the middle OF 1904, however,
uriccs began TO fall. This was probably
due largely 10 the Standards fear, the
report SAYS. that the continuation Of such
eNtortiouate prices would tempt new oOm-
~petitors into the field. The development
Of the new oil fields Of Kansas, Texas and
California at this time offered greater pos
sibilities TO competitors than had existed
before. The report continues
Notwithstanding the decline in prices
during the latter part OF 1904, which con-
linued into 1905, the margin between the
price Of crude oil and the prices of it's
products was higher during 1905 than IL
had been in earlier years. Thus the mar
yin between Pennsylvania crude and
Illuminating oil WAS SO cents az compared
with So cents in 1928 and So cents in. 1909.
The margin between the price OF Penn
Eylvania crude oil and the weighted ave-
rage price Of its principal products for the
first naif OF tg)5 was IL cents, az compared
with 6.5 cents for the year 1898.
THE policy Of the Standard Oil Com
pany in increasing prices during recent
years is shown not merely by the COMPARE
son OF the extreme years, 1898 and 1903,
but by comparison OF groups Of years.
The average margin between Pennsylvania
crude and Illuminating oil from September,
1897. TO the end OF 1899 was SO cents per
gallon; from to 1902, inclusive. o cents per
gallon, and from 1903 TO 1905, SO cents, OF
an increase Of 3 cents over the first period.
The average margin for all the products
combined for the years 1893 and 1890 was
6.6 cents; for 1900 to 1902, III cents; for
1908 to June, 1905. 81 cents, or Is cents
higher than in 1898 and 1899"
Substantially the same conclusions as
TO the movement OF prices are drawn from
= comparison Of the price Of Lima crude
oil with the prices Of it's products.
when it il remembered" says Com
missioner Smith, that from OF TO | cent
per gallon constitutes a good profit on the
business, the meaning Of an increase OF
10 cents - he last eight years covered
by this re a. is evident, even as applied
TO ~iluminat.aS OIL"
Discussing the profits Of the Standard.
Commissioner Smith says that its invest
ment has increased greatly and during
recent years has much exceeded its capitali-
cation. He continues:
This fact is indicated by the excess of
profits above the dividends. BY the end
If 1895, when the capitalization was S97 .25O.-
mo. the net value of the assets Of the Stand
ard had reached sli7, 22O, 800. 90. How much
the net value OF the assets has increased
since 1904 must be a matter of conjecture.
\ consideration Of the known figures for
available years shows that the profits in
excess Of dividends added TO the invest
inent by the Standard from 1897 TO 1905
could not possibly have OK s225, 900. 600.
In that case, however. the above estimate
If the total profits since 1882 would have TO
ne increased from $3.50. 900 900 TO over $780,
100. 900. II seems scarcely conceivable.
however. that the Standard should have
hcen able 10 invest such an enormous sum
in the extension OF the oil business proper.
II seems more likely that part Of the surplus
earnings. particularly during the last few
years. must have been invested in securities
not connected with the oil business or loaned
or deposited in banks"
Commissioner Smith says parenthetically:
When il il remembered that, particularly
during 1904 and 1905. much the larger part
u the profits OF the Standard must have
been derived from its domestic business,
which constitutes not much more than half
~ itstota business. il Is clear that the domes-
tic consumer has been compelled TO psy an
eNorbitant tribute to the oil monopoly
The only individual concern regarding
whose profits the Commissions of Corpora
tions was able to obtain information il the
Naters-Pierce Oil Company which was
once expelled from Texas. This Is the COM
pany concerning which Senator Bailey Of
Texas got into a great deal Of trouble a year
or 50 ago. Waters-Pierce does in the United
States only a marketing business, but in
Mexico IL is engaged in the refining Of oil
rs we'll az in marketing The capital stock
II the Waters Pierce Oil Company for many
years has been s4OO. 900. Its profits during
recent years nave increased with enormous
rapidity. In 1898 the profits we're at the
rate OF 258 per cent. on the capital stock. In
1904 the profits were more than $40 per cent.
on the capital stock.
la a chapter headed Real Sources Of the
Standards Power" Commissioners Smith
says:
The representatives and defenders Of the
Standard Oil Company, as a correlative of
their unwarranted claim that il has been
the cause OF the reduction in prices, make
The further claim that the Standards dom-
nation OF the industry to-day is due to the
fact that 1t furnishes products at reason
able prices and that the less efficient indie
pendent concerns are unable to extend their
business because they cannot afford to sell
so cheaply. One sufficient proof that this
argument il not well founded is found in
the statistics regarding price discrimination,
which will be presented later. 1t will be
shova that the prices are very much lower
n PLACES where Independent concerns sell oil
than in other places. II follows that il the
independent concerns are able to live on the
basis Of the prices which they secure in their
particular markets they could make large
profits IL they could market their oil through
INT the country and obtain average prices
~ high as the average obtained by the
STANDARD on its own business.
a further proof that on the avera ge
q Standards prices are not lower than
those which independent concerns can
nford 10 make is found in a comparison
ur the costs Of independent concerns with
he Standards costs. The costs of the pres
Ont independent concerns in the oil indus
Try. plus a normal rate Of profit, are less
lhap the costs Of the Standard, plus it's
cxtortionate profits. This fact, which is
clearly demonstrated in this report. shows
that II the country were supplied with pc
~Iroleurn products wholly by smaller com
pcting concerns prices would be lower
iuan those the Standard charges on the
average. IL means that the Standard
has pocksted the profits arising from it's
economies and large additional monopoly
profits besides"
The proof IL clear. Commissioner Smith
declares, that the enormous profits Of the
Standard Oil Company are due not merely
10 superior efficiency. but also to monopoly
power. Independent concerns could II
they had the opportunity afford TO sell oil
at prices less than the Standard charges
on the average In the country as a whole,
Tho Standard Oil Company gives the coun-
Try none Of the benefit Of it's superior eff
cheney. but on the contrary charges prices
higher than those which would exist in the
absence Of such a combination.
Attention Is again directed to the fact that
the Standard pipe lines have very gem
.-,Iy ratla1 nnd rae.aaI 90