The Washington herald., 1907-08-05

ure Of reasonable commercial return.
mat II is steadily increasing prices and
that its claim that it has benefited the
consumer is a bald Misrepresentation Of
facts, are among the charges embraced
IN report, showing the Prices and
Profits Of the Petroleum Industry" Just
forwarded to President Roosevelt by Com
mission Of Corporations Herbert Knox
Smith.
IN his letter OF transmittaI to the Pres
identr the Commissioner OF Corporations
severely arraigns the Standard. Among
other things. he says:
The Standard has repeatedly claimed
that It has reduced the price of oil: that
II has been a benefit to tie consumer
and that only great combination like
the Standard could have furnished oil AZ
the prices that have prevailed.
Each one Of these claims is disDrovad
by this report
lie Standard mas consistently used its
power to raise the price Of oil during tha
last ten years. not only absolutely bYt
aISo relatively. 70 the cost OF crude Oil
1t appears conclusively that the result
of this 1Standard's) domination has besn
to Increase the prices Of oil paid by the
consumer, and eorrespondingIy TO increase
the profits received by the STANDARD
I II Is not true 10 say that only such
great combination can furnish oil at the
prices which have been charged.
Five Hundred Million Dividends
The total dividends paid by the Stand
ara from lSS2 to 1856 were $50. 500 soa n
Inc dividends, however. were much less
tnan the total earnings Exact informa-
ton as 10 these earnings Is available only
for the years ISs to 1855 and for fl,a
years Es8 10 1905, inclusive. an aggregate
Tor these years Of about s7l4Ooe.e0 but
from these figures the earnings for the
other six years may be estimated with
some degree Of correctness. and II fs sinh
stantially certain that the net earnings
OF the Standard from 1872 10 1906 were at
least sIS0,oOg.ooo, and possibly much more
These enormous profits have been
based on an investment worth. at the
time OF its original acquisition, not more
than S75,00o,O09
Furthermore, the rate of profit on tba
capitalization has Increased greatly. From
lS2 TO 1894 The net earnings averaged
about 10 per cent on the capital stock or
trust certificates outstanding. while the
average net earnings for the period from
lsoS 10 1860 were about s. per cent yearly"
Standard Responsible for Price.
Commissioner Smith declares thar the
Standard is responsible for the course Of
the prices Of petroleum and its products
during the last twenty-five years. He
says: In short, il may be said that the
great decrease in prices which took place
in the period from 1866 to 1874 was due to
competitive conditions, while the much
smaller decrease that took place from 1874
to the present, under the domination Of
the Standard, has been due to conditions
over which the Standard had no control
and has been more than Offset by in
crease In the value Of the by-produ-ts.
and cannot be placed in any way to the
credit of the Standard Oil Company" In
concluding his letter to the President. con
cerning the Standard. the Commissioner
Of Corporations says:
Its domination has not been acquired
OF maintained by its superior efficiency.
but rather by unfair competition and by
methods economically and morally untus-
tifiable. The Standard has superior eff
cheney in running its own business: il has
an equal efficiency in destroying the busi-
ness Of competitors. II keeps TO itself the
profits OF the first and adds to these the
monopoly profits secured BY the second.
The history Of this great industry is a
history of the persistent use OF the worst
Industrial methods, the exactiOn of ex-
0rbitant prices from the consumer. and
the securing Of excessive profits for the
small group OF men who over a long
series Of years have thus dominated the
business"
Finds Profits Excessive.
The investigation of prices of petroleum
in the United States. according to the re-
port Of Commissioner Smith, shows TWO
conspicuous facts;
!. There has been a very marked in
crease in the margin between the price
of crude oil and the prices of its leading
finished products 81 the United States
during the past ten years. This Increase
in margin is only in small part attrib-
utable to increase in costs Of conducting
the business. Although since the tine
when the Standard Oil Company first
secured a large proportion Of the busi-
ness, about 1874, there has been a material
decrease in the margin between the price
of crude oil and the price OF Illuminating
oil, the Standard Oil Company can claim
no credit for this decrease. The margin
in the domestic trade is greater to-day
than it would be under free competition.
? The profits Of the Standard OIL Com
pany, particularly on its domestic busi- Z
ness, are altogether excessive, and they 4
have been higher during recent years
than formerly.
The year 1893 marks the elimination oil
the profits OF the Standard on its domee-
tici business. and on its total domestic and
foreign business as well The anthracite
coal strike of 1902 caused a shortage Of
fuel, which led to an increased consump-
tion of Illuminating oil for fuel purposes
during the winter of lg02-03. The price
of illuminating oil ross greatly at this
time, and drew the prices of other prod
ucts with 1t.
Toward the middle of 1904, however.
prices began to fall. This was probably
due largely to the Standards fear. the
report says, that the continuation OF
Continued on Page B, COIursn 9.