The Washington herald., 1907-08-05
OIL TRUST FLAYED
IN KNOX'S REPORT
CONTINUED FROM PAGE ONE.

velopment of the new oil fields of Kan
sas, Texas, and California az this time
offered greater possibilities 10 compet-
tors than had existed before. The re-
port continues:
Notwithstanding the decline in prices
during the latter part Of 1904, which con-
tinued into 1885, the margin between the
price of crude oil and the prices of its
products was higher during 1905 than It
had been in earlier years"
what Becomes OF Surplus PrO1ltEf
Discussing the profits Of the Standard,
Commissioner Smith says its investment
has increased greatly, and during recent
years has much exceeded its capltaliza-
tion. He continues: This fact is indicated
by the excess of profits above the divi-
dends. By the end Of 1886. when the
capitalization was $97, 80 900, the net value
Of the assets of the Standard had reached
$ll7. 90 399. 80. How much the net value of
the assets has increased since 1896 must
be a matter Of conjecture. A cOnsidera-
tiOn Of the known figures for available
years shows that the profits in excess Of
dividends added TO the investment by the
Standard from 1891 TO 1906 could not pos
sibly have exceeded S225, 900. 900. In that
case, however, the above estimate Of the
total profits since 1852 would have to be
increased from $3.50, ,000,0 600 to over $50
100000. It seems scarcely conceivable, how
ever, that the Standard should have been
able to invest such an enormous sum in
the extension of the oil business proper.
1t seems more likely that part Of the sur
plus earnings, particularly during the last
few years. must have been invested in
securities not connected with the oil busi-
ness or loaned or deposited in banks.
Trust Exacts ExOrbifant Tribute.
When 1t Is remembered that. particu-
larly during 1904 and 1905. much the
larger part Of the profits Of the Standard
must have been derived from its domestic
business, which constitutes not much
more than half Of its total business, it is
clear that the domestic consumer has
been compelled to pay an exorbitant
tribute TO the oil monopoly"
The only individual concern of whose
profits the Commissioner Of Corporations
was able TO Obsain information is the
Waters-Pierce Oil Company, which was
expelled from Texas. Waters-Pierce does
in the United States only a marketing
business. but in Mexico it is engaged in
the refining OF oil as well as in market
ing. The capital stock Of the Waters
Pierce oil Company for many years has
been 10000. It's profits during recent
years have increased with enormous "a
pidity. In 1898 the profits were at the
rate OF 256 per cent on the capital stock.
In 1904 the profits were over go per cent
on the capital stock.
Discrimination Key TO It's Success.
In a chapter headed, Real Success Of
the Standards Power" Commissioner
Smith says: The representatives and de-
Tenders Of the Standard OIL Company. as
a correlative Of they unwaTranted claim
that il has been the cause OF the reduc-
tion in prices. make the further claim that
the Standards domination OF the indus
try to-day is due TO the fact that it fur
nishes products at reasonable prices, and
that the less efficient Independent con-
Germs are unable 10 extend their business
because they cannot afford to sell so
cheaply. One sufficient proof that this
argument is not well founded is found in
the statistics regarding price discrimina-
ton, which will be presented later. 1t
viii be shown that the prices are very
much lower in places where independent
/ concerns sell oil than in other places. It
| follows that il the independent concerns
are able to live on the basis Of the prices
which they secure in their particular mar
kets, they could make large profits If they
could market their oil throughout the
country and obtain average prices as high
as the average obtained by the Standard
on its own business.
"A further proof that. on the average,
the Standards prices are not lower than
those which independent concerns can af-
ford to make is found in a comparison
OF the costs Of independent concerns with
the Standards costs The costs of the
present Independent concerns in the oil
industry, plus normal rate OF profit. are
| less than the costs Of the Standard. plus
it's extortionate profits. This fact, which
is clearly demonstrated in this report
shows that If the country were supplied
with petroleum products wholly by small
er competing concerns, prices would 5e
lower than those the Standard charges
on the average It means that the Stand
ard has pocketed the profits arising from
/ its economies and large additional mOnOp-
oily profits besides"
Attention is again directed TO the fact
that the Stanard pipe lines have very
/ generally failed and refused to transport
oil for others. and that in the rare cases
where they do so have charged altogether
extOrtiOnate prices.
short Measure and Deception.
What it may be asked Commissioner
Smith says, is to prevent independent
/ concerns from either taking away part
of the Standard trade or forcing it to re-
duce prices? The answer to this question
is found in the unfair practices of the
Standard The most important of these,
the cornerstone on which the Standards
power was first built. was railroad dis
elimination. The Standard was able to
maintain in position this primary support
OF its domination down nearly TO the
present time-that is. until its system Of
preferential freight rates. secret or open,
was exposed by the report of this bureau
on the transportation of petroleum in May,
1896. The difference between the rates
charged to the Standard by the railroads
and the rates charged, to independent con-
Germs for similar service has, in many
cases and for enormous areas, been alone
greater than a fair profit"
Commissioner Smith charges that the
Standard has been guilty of giving short
measure and of deception regarding the
quality of the oil sold" In conclusion
Commissioner Smith says:
Without railroad discrimination and
unfair methods of competition, the Stand
ard could never nave maintained its great
proportion of the oil business in the
United States. while at the same time ex-
tOrting such immense profits from the
American consumer. The claim Of the
Standard that its control of the business
is due to the ability to maintain low prices
because of superior efficiency Is A com