The Mitchell capital. (Mitchell, Dakota [S.D.]) 1879-1918, 1907-08-09

gong sun further back and taklng up tho
industry. Available prices for the period
preceding 1897 are much less complete than
FOR the later period, and conclusions here
port prices, which. as a matter of fact,
have never represented exactly the course
of prices in this country, but which prob
ably correspond to domestic prices much
more closely In the earlier periods than in
tie later ones. Making due allowance for
these considerations, however, these long
e' series OF prices are interesting because
they cover both the earlier competitive
period and the later non-competitive or
m~onopolisdc period, and allow a compari-
son between the two. They demonstrate
the falsity of the historic claim of the
Standard Oil company that by reason Of
its extraordinary efficiency it has brought
prices to a point lower than would have
been reached had business remained under
hands of a numter Of comparatively small
er concerns.
Normally Competitive.
TIL industry may be said to have been
normally competitive from 1853 to 1914. and
during that time there was a fall in mar
gin between the price of export oil in bar
rels and the price OF Pennsylvania crude
of from 1915 cents IN EeS to 9.02 cents in
1874. This decline was muail greater than
that which has taken pl>:s since. 1t is
conclusive evidence that further reduction
would have been made In the absence OF
any general combination. Moreover, q part
of the reduction which took place from
1874 to 1879 under Tie Standard regime was
due to decrease IN, transportation costs and
in railway rates. ii1e rates on Illuminating
oil from PennsysNa MIA fields to New Yors
in 1874 being 4 cents per gallon. while our.
ing part of the year 1879 it was not over !
cent per gallon. The construction of the
reduced the cost of transportation stu
further. and 1t mugs be remembered that
the Standard was not the originator of tho
idea of Il seabourd pipe line. but that the
1ltA N.ffar pine r0nnInN- then Wn0llN M
dependent, first built such u line.
Furthermore, the reductions in margins
since 1875 have been much less than the
Standard has often claimed. and such as
have occurred have been more than offset
by the increased value OF the by-products.
In general. even the export prices, which
ably for the Standard, show a marsain
during recent years not very much lower
than twenty-five years ago. In 1879 that
margin was 6.5 cents; in 1903 the margin
was 4.9l cents: and, as indicated above. IN
the last few Years domestic prices have
risen much more than the export prices.
Ousst by Increase.
In short. 1T may be sad that the great
decrease in prices which took place ia the
period from 1866 TO 1874 WIS due to COM
petitive conditions, While the much smaller
decrease that took place from 1874 to the
present under the domination of the
which the Standar had no control, has
been more than offset by increase in the
value of by-products, and can not be
placed in any way TO the credit OF the
Standard OIL company.
The fact that the Standard does nearly
nine-ten;hs OF the petroleum business has
been demonstrated in a previous part OF
this report. 1t now appears conclus.vely
that the result of this domination has been
to increase the price of oil paid by the
consumer, and correspondingly TO increase
the profits received by the 1t is
not true to soy that only such a great
combination can furnish OIL at the prices
which have been charged. Independent
competitors. though, small and weak; DO
survive and do business at prices which
are deliberately reduced by the Standard
within the small competitive areas reached
by these INDEPENDENTS. and which are
much lower than the average prices re-
ceived by the Standard throughout the
country.
More Efficient Machine.
1t is true that, taken as a whole, the
Standard OH company IS g more efficient
competitors. Nevertheless. careful esti-
mates based upon data submitted by a.
number of independent concerns as to the
cost of pipe line transportation. refining,
the Standards cost for these operations,
indicate that the total difference in eff
cheney, between the Standard and the in
dependent concerns is not very great. In
all three branches Of the business the su-
perior efficiency of the Standard would
not represent a difference In cost of more
than 112 cents per gallon on the average
for all petroleum products. The excess of
the profits OF the Standard on it's Amer!-
can business above the average competi-
tive profit is much more than this, a
profit at least as large as the average
business return could be secured by the
Standard from not over 4 cent profit per
gallon. The profits of the Standard on tie
refining ana marketing business alone at
five of its p~lants-Lima, Whiting, Sugar
Creek. Neodesha and F1orence-have been
shown TO average about % cents per gal
lon, and if to this be added the profit on
pipe Lne transportation the total profits
would be at least 3 cents per gallon. The
excess, therefore, of the Standards profit
over such average business return is at
least "a cents per gallon, or much more
than the difference in efficiency estimated
above between the STANDARD aud the inde-
pendents. to-wit, IL cents per gallon. In
other words. the Standard. though more
efficient than its competitors. gives to the
public none of the advantage due to this
superior efficiency. but, on the other hand,
demands AN additional excess above such
advantage.
Can Claim No Credit.
THIS confirms the conclusion already
stated, that the STANDARD can claim nc
credit for such reduction in prices as has
taken place since the carly history of the
ent concerns that now exist. halassed and
restricted as they are by the aggressive
price cutting of the Standard, by its UNI
far competitive methods, and until re-
Gently by a widespread system OF railroad
discrimination heavily handicapping all OF
its competitors. nevertheless can and dc
sell OIL profitably for less than the Stand.
ard charses. it inevitably follows that haG
the industry foilowed the FORMAL course
J oe development and had no great smbina
tit,n arisen to exercise substantial coEtro
therein. prices to the consumer would have
been much less han they actually are OF
have been.
The following facts are proven: The
STANDARD has not reduced margins during
the period IN which 1t has been respon.
sible for the prices Of oil. During the last
eight years covered by this report QS9S tc
1860 Il has raised both prices and margins
Its domination has not been acquired OIL
maintained by its superior efficiency. bu'
rather by unfair competition and by meth,
DDS economically and morally unjustiiiable
The Standard has superior efficiency il
running it's own business; 1t has an equa
efficiency in destroying the business o.
competitors. 1t keeps for itself the profit:
OF the first and add TO these the monopol,
profits secured by the seeond. Its profit.
are far above tie highest possible STANDARD
OF a reasonable commercial return, ant
have been steadily increasing. Finally
the history of this great industry is a his
tory of the persistent use of the worst in
dustriai methods. the eNact.on of exorh;
tant prices from the consumer, and the Sc
curing of excessive profits for the small
group CT men who over a long series .
years nave thus dominated the business.