The Washington herald., 1907-05-20
OIL TRUST TACTICS CRUSH PIPE LINE.

reaching determinations in TRANSFORMATION
facilities and rates. both by railroad and
oy pipe line while refusing such facilities
so Tar as possible TO all competitors"
HERBERT KNOX SMITH,
Commissioner Of Corporations
The report opens with an outline OF the
position OF the Standard oil Company in
relation 10 the petroleum industry as a
whole. This outline shows the extent OF
the Standards business. Then comes a
history Of the formation Of the monopoly.
together with an account Of the financial
operations involved A list given OF
the companies controlled by the Standard
OH Company and a comprehensive sta
tistcal report on the resources, equip
ment, and business Of the company fol-
| low Then the commission takes uu
the principal subject Of the present re-
port-the use and abuse OF the pipe lines.
This Mr.. Smith outlines as follows:
Abuse of Pipe Line Monopoly.
Abuses in railroad rates would have
lost much Of their effect had competitors
OF the Standard Oil Company been able
advantageously TO resort 70 transporta-
tion Of their crude oil by pipe lines. since
this would have enabled them TO estab-
lish refineries in the vicinity Of the great
distributing centers. and thus largely re-
duce freight costs on the refined product.
BY the laws Of Pennsylvania. West Vir-
ginia, New York. and Ohio. pipe lines
have long been declared common car
riers. II the independent oil producers
and refners could have used the Stan
dard's pipe lines without restriction and
at reasonable rates, they could have COM
peted with the Standard on an approx
mately equal basis. But the Standard
pipe lines have been practically closed to
Independent shipments. At the same time.
in order 10 secure TO itself the exclusive
advantage Of this means Of transporta-
uOn' the STANDARD has bitterly fought
the construction Of independent pipe lines.
and has resorted 70 unfair methods OF
competition 70 crush or restrict those few
| rivals who have succeeded in getting lines
established. A detailed description of
these practices against independent pipe
/ lines is reserved for a subsequent report
/ but they may be briefly summarized here.
One method adopted by the Standard
! Oil Company 70 prevent independent in
| terests from laying pipe lines. particu-
| larly 10 the Atlantic seabOard. has been
60 buy up all lands along the route whlcn
the rival line was 20 fellow, or 10 secure
/ rights Of way Of its own across such
/ routes. a more effective method has been
20 enlist the support Of railroads in re-
fusing 70 a rival rights of way across
| their tracks.
Another method several times en-
ployed by Standard interests is to obtain
! complete or partial control Of independent
| pipeline enterprises by purchase Of part
l Of their securities. As the stocks Of sew
/ eral such concerns have been widely dis
tributed, the Standard. by Offering alb
/ surdly high prices, has been able 10 buy
| up a large proportion.
"Premiums" Most Effective.
THE most effective method. however.
| employed by the Standard in attacking
independent lines IS the payment Of pre-
miums' on crude oil at the wells 20 those
! producers i1 the immediate vicinity Of
the independent line. That IS to say the
/ Standard Oh Company has Frequently
gone to the producers supplying. or likely
TO supply. the rival line and offered for
their oil from TO % cents per barrel or
even more. above the current price. Sev-
/ eral independent pipe lines have thus far
/ been forced out Of business. and others
have had their operations greatly re-
/ strictsd The payment Of such premiums
/ has been openly admitted by Standard
/ officials who. however. have defended
them as natural and necessary incident
IN competition.
in order 10 accomplish such supprez-
sion Of Independent lines az a minimum
/ Of expense 20 itself. the Standard oil
i Company has Furthermore. adopted the
/ expedient of bogus competition. That is
1 % say. instead Of Offering such premiums
/ on oil in its own name. % has often en-
/ ployed a dummy for the purpose.
If the Standard Oh Company acted as
/ A common carrier in the operation Of its
/ pipeline system. At reasonable charges.
/ the great advantage which il now derives
I from It's control of pipe lines would II
/ very substantially modified
/ AS matter of fact the Standard oil
/ Company has for many years almost COM
I pletely failed % transport of for others
/ through its pipe lines. In some cases
\ there has. been n direct refusal to trans
/ port OIL for others. an other instances the
Standard has refused 10 deliver oil at
/ points desired. or has insisted on imprac-
/ ticabIe conditions. The Standards pipe
| lines in the lstern fields have always
/ permitted persons who put oil into the
I pipes 10 retain ownership indefinitely ton
! payment Of storage charges. but 20 get
/ physical possession of an equivalent
quantity Of oil again has been quite a
different matter. The practice as 10 stor-
age has practically meant only that the
owner could choose his own time for
selling To- the Standard This position
Of the Standard Oh Company has been
so generally recognized by producers and
| independent reineTs that for many years
comparatively few requests have been
made 20 The company to transport oil for
other parties. The bureau has. however.
a record of several fat refusals on the
part of the company to perform this
service
Tn other cases the Standard has re-
/ fused TO deliver oil owned by independent
refiners at the desired point or at a point
sufficiently near their plants TO enable
them to use its pipeline service OBJ
yiously. this is quite as effective as a fiat
refusal to transport. Still another abuse
Of its pipeline facilities by the Standard
is the fat refusal to sell crude oil to out
side refinerS
Attitude Is Hostile.
In the amendment 20 the interstate
commerce act. passed by Congress IN
June 1906 pipe lines engaged in inter
state commerce were declared 10 be COM
mon carriers. They were also made sub
ject 10 all the provisions Of that act. and
are thus required. among other duties, 10
avoid discrimination. to make reasonable
rates, to file tariffs with the Interstate
Commerce Commission, and to submit re-
ports to that body. The reception thus
far given this act by Standard OH inter
ests is extremely hostile. The attitude
Of the Standard may be summarized as
follows: