New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1907-05-20
STANDARD OIL METHODS
HOW MONOPOLY GREW UP
By abuse of Transportation Facii-
ties, Com missioner Smith Reports.

Knox Smith Commissioner Of Corporations. TO
President Roosevelt on the position OF the
Standard Oil Company in the petroleum indus
try was made public to-day. 1T is apparent.
the commissioner says, that the dominating
position of the STANDARD Oil Company in the oil
industry has largely been secured by the abuse
of transportation facilities-irst. by fragrant dis
examinations obtained from railroads; second.
! by refusal 10 operate its pipe line system so
as to extend TO independent interests the bene-
fits to which they were morally and legally en-
titled while at the time the Standard has
prevented such independent interests from con-
strueting lines Of their own" He believes that.
aside from railroad discrimination and "preda-
tory methods of competition the most impor-
tant element in the company's monopoly is its
almost complete control of pipe lines The key
stone of its success. he says. has been the
transportation factor.
LETTER TO THE PRESIDENT.
The letter of transmittal to the President is
In part as follows:
1t is of the utmost Importance indicate clearly
those fundamental ia ass that form the basis OF the
Standards power. The monopoly Of this concern
Supply % of oTnde OH G Not o9er S Of the
total production Of crude oil in the country IN TO
1t cannot be strongly emphasized that It's
so0yra of aG ac in one form or
another. Additional means or domination have
unfair competitive methods in the sale OF products
throughout it's entire history the factor OF trans
portation has been the keystone of It's success
The scandalous railway determinations obtained
by the Standard IN its earlier years as against Us
competitors did more than all ether causes together
70 establish II IN us controlhnS posluon- LtCer.
when the rebate per Sc that is. the actual phys
substantially abandoned the Standard able
by compelling the cooperation of the railroads. 70
coyering almost the entire county. and Of such
{
and make profit on oil at prices which left no
profit for competitors The existence OF many sucn
important railway Determinations set forth IN
transportation of petroleum in May. 1895. and as
result OF that report all the secret rates which had
Grtminatons in open rates have largely been aban-
This system Of railway Determinations allowed
the STANDARD 10 control substantially that link n
the business that lies between the refinery ane the
consumer. BY means of IT'S great pipe line system
II also controls the between the producer OF oil
more than forty thousand rnifss covering com
and nid-contneRt feds with great trunk lines
running TO the seaboard and TO the great markets
and distributing centres where its largest rehnereS
are located All attempts on the part OF others to
opposed bv the Standard and usuaIl- v-fh Success
BY means OF vexatious litisation and pre-enlpting
refused rights OF way across their lines. and al
iusted their rates so 10 injure competing lines
oil in the limited areas reached By rival lines the
rise OF any eficienI competitor in The pipe line
business rom tne older nelds 70 The AtlantS sea
! established.
Having thus established and maintained its
monopoly OF the pipe line business, it has in sub
stance refused 10 act as common carrier or to
transport and deliver oil for independent producers
. or 10 Independent reflneries and. where making
them at least as high as the raiiroad rate letWee
tne same POINTS athough the cost Of pipe line
The economy OF pipe line sporration as COM
pared with that by rail IS "A vital consideration. A
rehner wholly dependent railroads for his crude
supply cannot hone to become factor of much i'm
Of rail transportation costs has fixed the location
Snd mas Testricted most OF 1heir sales or the re-
ns pTfagst m 10 the the S'e bp6 b ss a2n
/ comprehensive pipe line system has given 1t the
choice Of strategic positions for Its rehneFies
70 the largest distributing and exporting centres
of the country.
METHODS OF MARKETING OIL
Another important element in the control
the industry Is secured by the Standard through
its marketing methods. II uses very generally the
bulk system OF delivery 10 retail dealers by tank
wagons-a cheaper. safer and far more convenient
method OF delivery than by barrels This not only
hs s0t arse f bs asbe p6 t Sst oa also
r. So Dealing thus directly with the retailer The
differences 1t may desire for the purpose OF de-
stroying local competition without disturbing its
price large section of its trade. The tank
wagon system OF the STANDARD is as complete a.
returns this subject from more than ffty-three
The towns in which tank wagon deliveries weTs re-
ported, such deliveries were made by the Standard
I desire 10 can particular attention to the facts
.
the striking comparison made between the esti-
mated cost of the Standards pipe line transporta-
company These rates are from three TO six times
great as they should he taking into considera-
probation and profit on investment
stantal failure Of the standard pipe lines to COM
ply with the common carrier requirements OF the
most Of the standards trunk lines do Interstate
business. and should. therefore. under that law.
the Prairie oil and Gas Company. which furnishes
the only outlet from the mid-Continent field; the
Ohio OF COMPANY which furnishes the only out
Compauy and the Tide Water Pipe COnpany-haVe
not e3 any ny SeT s3 tariffs G o2nt az al M 6ba en9rsy
standard lines. while fling certain rates. have done
compliance to Rbsurdty-by fling rates only
20 perfectly insignificant points, where no one de-
on Company only has redneries Gor example.
naming rates 10 New York Harhcr, by placing
impossible restrictions upon the acceptance of ship
meutS requiring single shipments 10 ~ at least
AZ 600 or even 100000 barrels in amOunO. and by
fixing even the rates so filed AT point wholly eS-
CeSstve and unreasonable in amount, when COM
having prevented the rise OF independent pipe
lines. having destroyed or absorbed the Few that
tton HAVING then refused the uss OF it's own lines
TO producers and refners who had no other outlet.
lines are concerned the common carrier require
ments of the rate law. This condition should re-
in view of the action OF the Standard pipe lines re-
spectng the new and increasingly important MD
ton Should given the enforceunent Of the pipe
line provisions OF that law II should be rurtner
nOfnted out that I'm certain Of the states which
would naturally be crossed BY independent pipe
lines no law now exists giving the right of eminent
In brief. the history and present operation, t OF
these Standard interests show thIoHghont the ias
the petroleum industry OF the country. deHnerate
troI OF that industry by less than dozen men, who
merciaI eficencv OF the standard while
has baen directed,