The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1907-08-12
COMMISSIONER SMITH
WHACKS STANDARD OIL
Letter to Roosevelt and Report on the Price
Policy of the Giant Cor
pOratiOn.
General Advance the United States While Foreign Countries
Are Favored with Marked Decline.

claimed that there has been severe COM
petition against the American product
from the oils of Russia and other for
eign countries and that the reductions
in export and foreign prices were neces-
sary to retain the American export trade.
Neither of these arguments Is we'll
I founded There was 10 Oversupply of il
Eliminating oil during the years 1904 and
1870, at which time foreign prices We're
severely cut The exports from the Unit
ed States during 1904 were less than in
1891 and 1902. The exports from the five
important Oil-producing countries COM
bined show little more than a normal
increase. The worlds production in 1905
was less than in 1884 The exports from
the five principal countries combined in
1905 were more than per cent less than
IN 1901 There was an actual decline In
the total imports into the United King
dom during 1894. as compared with the
two preceding years. and a still more
conspicuous decline during 1905. NOtwith-
standing this, the prices in England fell
! enormously. The imports into Germany
during 1904 were almost exactly the same
rs during 1899, and the imports during
1898 fell off considerably. But the Ger
man prices declined very materially in
both years.
The conditions Of supply therefore do
not excuse the extraordinary decline ian
foreien prices in 1905 and the resulting
discrimination against the American con-
sumer. This decline was not necessitated
by any oVerSupply of oil. In fact, the
movement of prices was precisely the Op-
Z pOstlt u ltltE WHICH WOULD nave Deen
expected from the changes in supply.
Standards Arguments False.
The falsity of the Standards argu-
ments Is further demonstrated by the
/ fact that during 1894 and 1900 period
when the Standard claims that an over
supply existed. that company actually
took large quantities of oil in Russia To
supply its trade in Europe and the ORR
emit During 1904 it shipped from Russia
over million and d half barrels Of IL
Illuminating oil for distribution in Euro
pean and ASlatIc countries. 1t has Sc
cured large crude production in Rou-
mania ana has established FefineIies there
and IN other countries for refining for
/ elgn erudes. 10 is perfectly evident th1t-
/ the Standard has not always been con-
cerned with maintaining the export trade
! in American Illuminating oil but has been
solely interested in maintaining its own
( domination in the markets of the world
frequently at the expense OF the United
States.
1t is true that during 1904 and 1905 the
standard met new competition in foreign
markets but It's new competitors We're
I largely q group of concerns which drew
a considerable part Of their supply from
the United States Itself.
Having a monopoly at home il has
charged such prices it could thereby
eXtOrt, and the American cOnSIIm-
er has had to pay these prices.
Meeting competition abroad. it has
given the foreign consumer enormously
{ lower prices and il 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 particular combination
which has used its power frequently and
conspicuOusly TO the disadvantage of the
American public.
\ still more important and extrdordin-
airy state of affairs appears in the COLI
ditiOn of prices in the United States A
study of the Standards price policy has
! brought to light. as shown in this re-
port very remarkable system of dis
examinations in prices for the same prod
ucts in different localities throughout this
country. 1t is evident that the Standard
charges a price which is prOpOrtiOnate to
the extent of its monopoly in a given
place. and reduces prices in proportion 10
the degree of competition which it may
meet,
Prices Not Uniform.
1t is To be emphasized that there is sub
/ stantially no general market price for pc
trOleum products, especially illuminating
1 oil The Standard sells most OF its illu-
minating oil and gasoline 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 puts it
in the power of the Standard to vary its
/ price according to local conditions with
out disturbing prices in other localities.
the significance Of the extraordinary
differences in prices charged in many diff
/ ferent sections Of the country or in diff
ferent towns can be appreciated only in
/ the light Of the fact that a very small
amount per gallon constitutes a fair mar
gin of profit on the investment in refiu-
ing and marketing of petroleum products.
/ A difference of about 7 mills per gallon
I in the price of Illuminating oil may mean
/ a difference between d profit of 10 per
| on investment in refining and marketing
and no profit at all. But the actual diff
! ferences in the Standards prices among
I competitive and nOn-cOmpetitive towns
and areas. after making all allowances
for differences in cost of production and
distributing, often amount to several cents
per gallon. A combination which can
( command the profits that these figures
/ imply. over large areas, has therefore OBJ
viously a tremendous weapon when it en-
| tiers on aggressive price cutting against
I independent concerns.
( The most accurate and complete data
were obtained by the bureau on this sub
/ jeet directly from the records of the Wa
/ tiers Pierce Oil company Ga Standard con-
| Germ. The territory of that company in
Continued on Page 2.