New-York tribune., 1907-08-12

In
widely separated. only small 1racton u . IN
difference in price. after deducting trelshI' Con
be explained by differences in cost ellheI oI mar
sstent ana wholly tInjusiahle policy of price dis
elimination against non-competitive localities.
WIDE RANGE WITHIN STATES.
Even in towns in the state or same vicinity
these wide discrepancies occur IN the f1lsl -
and Louisiana division of the Watels-fleIce Di
CompaDv in August 1903 the profit between de-
livered and selling price on BT'ihflIt Oh III
tank wagon and ouk ranged from lSs 10 oo' eelits -
ard in August, 1894. it ranged from 9-o' cent 10
505 cents In the South Texas division OF thlt
company, the same kind Of oil. delivered t. III
iron barrels. towns had pront margins oelo"
cents and twenty-one towns had margins above
cents in April. 1904. and similarly Striking ols-
narities cccl,r within other individual divisions.
Another interesting comparison is that showing
lowest and highest prices within gwen stdeyS3
In Arkansas the difference between the lowest anu
highest prices in December 1904, freight deuucteu
rs cents; Colorado. 81; Idaho % Loulsis.a ~
So Missouri. "a; Montana, i9; New Mexico i@2
Illinois, 4; Kentucky. 4$; Minnesota 4'o' ONO
4.S: Tennessee. ~ cents.
The evidence is absolutely conclusive that 1t IS
the policy of the Standard Oil Company L" taAe
fun advantage of all nOn-cOmpetItive condltons
impose the highest prices possible ana 10 tN-
tend such non-compettive conditions by asgres-
sve price cutting Gale Ilated TO drive out rivals
The enormous profits secured over most of the
country enable the Standard to carry out this
plan effectively ir those localities where price
cutting is demanded by this policy .,o
These discrimina tions in prices were largely mace
possible by the widespread system of discrlmina-
enjoyed by the Standard OIL Company thtiI re-
Gently exposed by this bureau in its report on the
transportation of petroleum. published in May 1896
The elaborate system OF rallroad dlscflhlIiii'lo"
extending as it did. over very large areas of the
country. allowed the Standard to place its oils IN
anv given section where ii happened encounter
connection at a cost much below the cost to its
competitors. IL shown in the bureau $ report
on this subject that in several instances the unfair
advantage enjoyed by the Standard in freight rates
was alone much more than living profit on its oil
business. The Standard was thus able virtually :"
suppress competition N such areas, and TINS AT
minimum of loss. or perhaps even without dc'"'i
loss to itself In this way it able to transform
competitive into non-competitve territory. Having
done this, the company promptly raised its prices
not merely to a reasonable level but far above it
Competitors. while theoretically able III view of
these high prices, TO re-enter such markets, were
practically prevented from doing so owing TO the
fact that the Standard, by reason Of its advantage
in rail rates. could. and would. at any time when
necessary. again depress prices 10 point where
such competitors would again be forced 10 condp'l
their business at loss. II is thus apparent tnat
discrimination in railroad rates is intimately identi-
fed with discrimination in prices
RAILROAD LUBRICANTS.
4 special and important branch of the oil in
dustrv is in the selling of railroad lubricants. Ger
tain very remarkable facts characterize tins bust
ness The trade with railroad companies OF the
United States lubricatng oils for rolling stock
amounts to about $457.rn year. me Stanaaf"
OH Company. through the Galena signal OH com
panv. which it controls. has an almost complete
monopoly therein certainty over % per cent OF 'llS
business.
The system upon which the lubrlcatng oils are
SOLD to the railroads Is some" hat unusual. Each
contract contains certain invoice prices a gallon
of oil which are to be paid unless reduced by other
provisions of the contract These Invoice prices
are excessively high and are the same in all con
tracts But there Is ais" in ea'h contract Secohd
factor tho mileage guarantee" BY this guarantee
the oil company agrees that the cost OF lubrica-
;ion particular road snail not exceed certain
amount for each thousand miles run hy locomo-
tives. passenger and freight cars These
guarantees. unlike the invoice prices. differ widely
f,r .f7a road
guarantees the prices CT lubricants 70 a given
road may Re plaeed al t"F f<eef,v9 , h''"''e
The oils used and the invoice prices per gallon
are as follows. Valve oil. * cents engine oil. =
cents. coach oil. 50 cents. car OIL y cents. re
ports were received from nincty-four railroad COM
pauies. which operate about 9l5 per cent Of the
locomotive and car mileage of the country. all uu-
der contract with IN" G"l"na-StEHHl OH Company
Nv reason of the very low prices II has paid over
a period of ten years. rs compared with other
To.ds tho Pannsvlvaria system stands in a class
by itself Through the mileage guarantees widely
different prices have been made 70 railroad com
nanies for the same oils. is shown ny the fol
lowing statement of average prices paid for valve
oil: The Pennsylvania system paid 20 cents a
gallon eight roads averaged 27 cents twelve roads
357 cents. fifteen roads Il cents, seventeen roads
cents. and forty-one roads - cents ne prices
Maid for the other oils were in exactly the same
proportion as those cited for valve oil The Inn
Iortapce of the itv-eight roads iu the classes
last mentioned is shown 10y the fact that in one
,,oar they paid S2s0a00o at prices which averaged
double those paid by the Pennsylvania
under successive agreements. which II has had
alrle opportunity terminate. to sell these luhri
eating oils the Pennsylvania during the last ten
years At prices which were about "he-laif the m
voice prices and few other roads have had
equally favorable contracts Moreover, The caIcG-
made by the Pennsylvania as TO the cost at
which II could compound lubricants from
oils bought in the open market, as well as state
mems made hv independent oil companies, show
that the prices paid by the Pennsylvania can be
rsed as a standard of reasonable price 10y which
to Judge the excessive prices paid by nearly all
other railroads in the country.
Absolutely satisfactory explanation has been
given for the excessive prices paid by nearly al
railroads. They must be attributed solely 10 the
fact that the Standard. which controls the Galcna
IS powerful enough either 10y reason Of its enor-
nous shipments of petroleum products or by It's
influence in financial circles. to induce most of the
railroads Of the country to pay excessive prices
for their lubricants. TWO typical instances of this
character may be cited
The Norfolk Western Railway Company has
been under contract with the Galena since 1897.
during time has paid about 81 per cent
of the invoice prices. against the Pennsylvania
payment of about ~ per cent In 1903 the Norfolk
& Western made careful and elaborate service
10 OF the oils of the Gaiena and two of its com
retitors These tests resulted I'm favor Of the
Union Petroleum Company an Independent con
Germ Of undoubted financial standing and business
reputation. Nevertheless. the contract was finally
closed with the Gaicna Signal OH Company in the
face of the fact that tn" net prices taking account
ot maGe guarautiesD offered by the Union Petro-
leum Company were 81 per cent lower than those
of the contract made with the Galena, and that #
tho hid the former had been accepted the Norfolk
& Western would have saved about $4,000 a year.
\ similar instance that Of the Louisville &
Nashville Railroad Company, which under
contract with the Gaena from 1897 to 1902 Dur
ing 1902 this road paid sc per cent of the invoice
prices as against the 80 per cent paid by the Penn
sylvania and yet the oil company proposed 10
increase the guarantees that the full invoice
prices would be paid. A memorandum which the
purchasing agent submitted to the president of
the railroad company along with this proposal
throws considerable light on the methods of the
Galena:
Attached to the papers is memorandum left
l,, tatiy pf Cal