New-York tribune., 1907-08-05

cor
1rsa " nart Of the reduction in margin which
tod nIsce in the period 1874 to 1879 was oue
to decrease in transportation costs. history of
The conclusion regarding the carry h'S,o' -
nricas down 10 about 1879. is. therefore that tn
great decline IN the margin between ,he ptio n IS
crude oil and the price of illuminating "I ~ ~
chiefly if not wholly due to natural OF sd.o eAtl
causas ouite independent Of any specai lhiiue ne ne
of the Standard OIL ComPan%; Inc 2tair1'' .S,uion
claim little If any credit for that reducuo.' -,
What little decline appears in the margin . ""1
on domestic prices OF illuminating oil during
wears as compared with twenty or tWenty-liNS 90
ago has been more than couhte r'i ~ o7,,c+-
increase in the quantity and value oi oF- ,,ea
secured. IN other words the lncIedSo "a roatrr
of by-prOduCts should have cauSen d Ihu'" 9'
decline in the margin for illuminating OH. ,.
This great increase in the value OF .! -
which has more than offset any relative taii ~ ', ~,
rrica f minimizing oil has been. in part que 10
improvements il the industry 1t Is safe 10 So -
under free competition there Woulu nay, nav zts tn
sufficient increase in the value OF by-lh oi'Ct9 -
porn,i+ greater reduction of the margin oe.Ns
crude and Illuminating oil than the Stahda'o a9 @
made In other words. the Standard has pocNet
all the savings due TO such ln!ToN me ,trtr,,I-
card 70 hv-pToducts rs can be considered attflou-
table to the Standard alone. and mas ''aei IL ~
nopoly power eXtort an extra pfolt 80 To-,
There has also during the period since 30 - -
undoubtedly a considerable reduction IN .t Or ot
attng costs OF conducting the petroleum lauuS'S
which independently of the increased Fdi'is -
by products, would have permitted d - -
the margin between crude and illuminating "li. =" ~
the Standard 10 maintain that the Hreitei p p';,~
all Of this lowering due TO us Sup'ti'
efficiency alone is unWarranted- As alItS'uN Fr.i
he carly history OF the nNluSAlN N''"
tion shows that reduction of costs wou'' ,Ier
have continued under free competition, a.
that may be. the Standard has talled 20 81 ~ ns
people the benefit of any savings II ei'et.eu, -,
ii,st s,.tld tho reduction in the margin between
rude and illuminating oil was mueh less i lian -
should have been In view OF the increased >a'"' "
For such lowering of the margin as has TAKEN TAKEN
place since 1879 therefore, tn" Staiud'" "
credit whatever.
SOURCES or STANDARDS POW t'i|'
The representatives. and defenders OF we n'a,Ir-
qrd OIL Company. as a Correlatlve "f in'iL , 20
ranted claim that II has been the cause of the r.
duction In pr>es make the further clam ma, 5 ~
Standards domination Of the industry TO-DAY Is ~
10 tha ract that II furnishes products az
,rices and that the less efficient independent con
Germs unabl" to extend theI uLs'
they can not afford 70 sell so cheaPl!' +, 90,
Onc sufficient proof that this argument - -
v-sll founded is found in the stat'Stic@ ter
price discrimination which will n" preseh'td - 80
1t viii be shown that the prices arr eEr,z sell
ioUer in places where independent '"hrr' y - ~
oil than in other places 1t foIIoWS ina 49, taejs
dependent concerns are able 10 I'VE ." - -
of the prices which they secure in the1r pa 10 -
markets they could make large proftS IL - "a
couId market their oil throughout tiie c~oI,.,f ~ -
obt.ip average prices high as the average o'
tajncd by the Standard on its own business c,,,
! further proof that. on the average. ,ue 80
- ,,r,ces arc not lower than those "iIIH ~,
,,ar,ief,t concerns can afford 20 make IL i"ui'1 "
. c,r,nariscT1 of the costs Of independent c"s conc
vim tho Standards costs. The costs OF ~ 'Ie , -
~ ,.,o,,,o,, concerns in the oil industry plus d
normal rate of profit are less than thr cos -
the Standard plus its eNtoTtlonat. Won "nts .1ort
fart which is clearly demonstrated ia 5''s -, no
a,s that n tho country supplied with pc
troIa,n Droducts wholly by smaller comp go
rarrs rrices would he lower than t'oSe ''. -
'' 10 -, -, tho average 1t means that the
standard has pocketed the profits arishE I'ol az
economies ana large additional n'nopoN PRINTS
besides. -osa,4 com
,.ti+ors g. greater with respect 20 the lhpe -,
ness than with respect 70 any "'n'r " ., - con
netroieutn Industry. There IS no doubt ina. 4 on
crr controlling an enormous pipe Hue system t .
handling an enormous volume 81 OH ca" W -
ncss more cnoaply than sihat'i .t'o-, attnn
t,,h -,-.l u,uasc and trunk line ttaiSp"' -.
combined the difference between 'nr nirot,
- I .rosa nr tho Pure Oil COMPANY a'V~
,,p In each cas-" per cent for deprf'la'I -, a
80 cont FOR profit amounts To about 81 c'''S "
i.rr,1 or ABOUT ture e"fourths cent 4 s-i'' ~
Much loss difference appears o'f"'"'n ,tiaass
- i,dau.rdeDr concerns in tn" rrhh'hE p''' p..
The difference between the averag" 1pe'a'lna pr 45
for all Standard rehneries ana loi =, tba out
Gent independent rehueTies caIno,; a. '
side exceed one-eghth cent per sai'oh'
DIFFERENCE ~ COST SLIGHT,
-, ,,car.,co in COS, between standard ana
,,o,iIs,t concerns IN the marketing Of petroleum
rroi,.rts IS very slight. Although by h'ea"~ :" -,
fai- methods Of competition IN" Stahdatd l."S
ari ~ 14rva,lt independent concerns from 'St'n-
fishing the system = tank wagon h"H''il a -
a. they would hay" done under normal ~. 49,,
tn. iudepeude1's nevertheless market Il iiie = -
,,,rtfnr nf their oil BY this method Comparison
shows no superior economy for the Sthnd@f'-
7, might naturally bc expected fhat "a EF''. '''
, -, btrFi controls mulch the larger proportion '
. the busness Of given city. could nla'K'' "'l '-
tank wagon more chcapy than number OF S'''"''-,
concerns eacn having only a moderate volume "i
. business The r"ason why III" difference IS % n"l
ct.ater than aYucarS from the statistics Is l"'s"
20 be found ia part in the fact that the S'a'"iI
has In Spond more than tie independents Tor super
vision and general administration IN "r''F 10 So ~
sflcieltt and honest servlo" from us m"l' @
af7ploycs and In part IN III" large sums 'h' 0'at!
. ard spends for maintaining its system OF ui''aii
conpetiton--securing and utilizing inioT r. re-
gardlnC shipments OF competitors anu "pe''''"e
. fTIg Isrf
t.onsidcTlfl, an the branches Of III" oil INDUSTRY
together tn. difference in cost between Standard
ana independent concerns is not great The dit
ference respect To pipe line transport may
H. r,rt at about three -fourths cent gallon; m
resr.ct to refining. at from "nc-f"nrth 10 one-hd'
cent white IN respect 70 marketing tI"fe Is Su"-
stantaII,- mo- difference. At the outside. the su-
perfor efficiency of the standard III IN" three
h,..rrb,s az tho business combined would not rep
resent - difference I'm OF more than IL cents 4
gallon on the average for all petroleum products
The excess of the profits of the Standard on us
do1nesti, business above a normal compei,N' PIn.,
is greater even than Il. cents Ii CATION ii' ~ .Il
Of the standard ON the refining ana ni4rh'tltlE
business alone at i've Of its plants 'i-'IHh' ono
Whiting Ind; Sugar Creek Me: Nrod's'ld hfiE-'
and Florence COLI have been shown TO average
about 20 cents a gallon. II 10 this he adCNd
y 1ronf ON pipe line transportation the total
would be AZ least : cents gallon The Iroft al
the Standard its Investment Tor the business ot
these i've refining plants found To be about y
per cent and il is highly probable that tn" stand
ards profit pine line business Is fuily as great
in percentage. Forty-two IeT cent is at least foHr
times tn" average prnht IN a 'iniellIe "'1iI .,t
facturinG business. IT, therefore. the total Vrch'
the Standard the products OF these hNe pants
WIS equal cents gallon. an average prott
would 10" not over = cent gallon. The excess oi
the Standards profit over average c"mpettttN"
/ uroGt is n -. cents gallon, much
ora than tn, possihIe difference of H. cents be
! tween Standard and independent costs. This means
! simply that even Il the products "f independent
/ concerns cost them li2 cents gallon more than
the Standards products cost, they could yet make
= good profit It prices considerably less than the
Standard EFFORTS: IN other words the standard