The daily morning journal and courier. [volume] (New Haven, Conn.) 1894-1907, 1907-08-05

17' IA AL So pdEki BOHe " LnS poISAt
# tho con5utnec This argument necss-
sarily involves She assumption that the
reduction of costs attributable exclu-
sitely to the Standard has been exceed
ingly great. Otherwise It would have
been impossible for the Standard at the
! same time to reduce prices more than
| they could have oeeu reduced without
the Standard and to retain for itself
profits vastly in excess Of the normal
profits of competitive Industries.
: 1t can readily be shown that this ex-
eravagant claim completely misrepre-
sents the facts.
The representatives ami defenders of
the Standard Oil company, as a cor
/ relative of their unwarrantcd claim
that 1t has been the cause of the reduc-
tion in prices. make the further claim
| that the Standards domination of the
industry to-day is due to the fact that
| it furnishes products at reasonable
prices and that the less efficient indie
pendent concerns are unable to extend
their bunsiness because they can not af-
ford to sell so cheaply.
One sufficient proof that this argu-
ment Is not well founded Is found in the
statistics regarding price discrimination
which will be presented later 1t will
be shown that the prices are very much
lower in places where independent con-
Germs sell oil than In other places. 1t
follows that if the independent con-
Germs are able to live on the basis of
the price which they secure in their
particular markets. 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 afford to make is found in com
parison of the costs of independent
concerns with the Standards cost The
costs of the present Independent con-
Germs in the oil industry plus a normal
rate Of profit are less than the costs of
the Standards plus its extortionate
profits This fact, which Is clearly
demonstrated in this report, shows that
if the country We're supplied with pc
troleum products wholly by smaller
competing concerns prices would be
lower than these the Standard charges
on the average. 1t means that the
Standard has pocketed the profits arts
\ ing from its economies and large addi-
tional monopoly profits besides,
Considering all the branches Of the
oil industry together, the difference in
cost between Standard and independent
concerns is not great The difference
in respect to pipeline transportation
may be put at about three-fourths
cent per gallon; in respect to refining,
at from one-fourth to one-half cent,
while in respect to marketing there Is
substantially no difference At the out
side, the superior efficiency of the
Standard in the three branches of the
business combined would not represent
q Difference In cost Of more than one
and one-half cents per gallon. on the
average for all petroleum products.
The excess of the profits of the
Standard on its domestic business above
a normal competitive profit is greater
even than one and one-half cents per
gallon The profits Of the Standard on
the refining and marketing business
alone at five of its plants (Lima, Ohio
Whiting Ind; Sugar Creek, Mo-; Neo-
desha Kan, and Florence COLI, have
been shown above to average about Oh
cents per gallon. II to this be added
profit on pipeline transportation, the
total would become at least three cents
per gallon. The profit of the STANDARD
on it's investment for the business o.
these five refining plants was found t.
be about 40 per cent, and 1t is haghly
probable that the Standards profit OF
, pipeline business is fully as great II
percentage. Forty-two per cent. Is a
least four times the average profit in l.;
, competitive manufacturing business
, IT, therefore, the total profit Of thu
Standard on the products of these flvt
. plants was equal to three cents per gal
lon, an average profit would not be owe,
three-quarters cent per gallon. The ex
cess of the Standards profit over al
average competitive profit Is thus a
, least two and one-quarter cents pc
gallon or much morethan the possible
, difference of one and one-half cents be
, tween Standard and independent costs
: This means simply that even If TIL
, products of independent concerns cos
them one and one-half cents per gallon
J more than the Standards products cost
! they could yet make a good profit a
prices considerably less than the Stand
ard EFFORTS; in other words, the Stand
! ard gives the consumer none of the ad
vantage due to its superior efficiency.
Again, the statistics of the Water
] Pierce Oil company above mentione
2 show that during 1908 its average prof
| it on the marketing Of Illuminating Of
$ in the United States was 2.6 cents pc
3 gallon, and that 1t made 4O.6 per cen,
{ on its investment in the United state.
t Had the Waters Pierce been conten
: with 10 per cent. on Its capital. ]
. would have made only or cent per gal
Ion on the average This excess of |.
cents per gallon above the amount nee
- | SSodiJ " RiF@ tii SFpif5c Sci!iESbitiN
. profit, occurring in the marketin
. branch of the business alone. wa
. greater than the difference betwee
Standard and Independent concerns
! respect to the cost Of all three stage
of the business--pipe-line transports
tion, refining and interchangeable
+ can not exceed one and one-half cent
per gallon.
a The proof is therefore clear that til