Los Angeles herald., 1907-08-05
STANDARD co.
is EXPOSED
OIL TRUST BLAMED FOR RAISING
PRICES
ENORMOUS PROFITS RECEIVED
BY GREAT CORPORATION +
Commissioner of Corporations, in Re-
port to President, Shows That Mo-
nopoIy Fixes Rates Beyond
Any Fair Figure

1OT the years 1875 ana 1879 was I'll
cents; for 1900 to 1902 IL cents from
1903 to June, 1905, rs cents, or an in
crease Of IL cents for the eight years.
Output Enormous
The tremendous Importance of the
increase in margins can be fully APP
preciated only by consideration of the
enormous output of the Standard
The average increase in the margin
for the products of both Pennsylvania
and Lima crude oil combined (taking
single years and not, as above
groups of years. from 1898 to 1904
was over cents per gallon, and, al
lowing very liberal estimate of one
half cent per gallon (25 per cent? for
increase in the costs of production
and marketing during this period. the
net average increase In profit during
these seven years would thus be at
least 10 cents per gallon. If the same
increase in profit be applied to the
Standards entire sales of all kinds
of petroleum products in the United
States in 1904, the profits for that year
would be about S2l, 900 more than
they would have been on the basis of
the prices and costs in 1898. AS a
matter of fact the known increase of
profits on its whole business, as stat
ed hereinafter, was more than this.
Similarly, for the year 1903, when
the prices of oil reached their maxi
mum, these prices would represent
an increase in the Standards profits
on sales in the United States that year
of nearly SIS, 100000 over prices and
costs in 1898.
These figures show conclusively the
pffaRf ~ ho oe ~
ard on the amount that the public
pays for its oil.
Naturally an increase has also
taken place in the profits of the Stand
ard by reason of this price policy. The
increase in annual profits from 1896 to
1904 was over s27 900, 600.
The total dividends paid by the
Standard from 1882 to 1906 were $751;
922,9OI.5O. averaging thus PALS per cent
per year. The dividends, however,
were much less than the total earn
ings Exact informa ton as to these
earnings is available only for the
years 1882 to 1896 and for the years
1903 to 1906, inclusive, an aggregate
for these years of about STA coo;
but from these figures the earnings
for the other six years may be esti-
mated with some degree of correct
ness, and it is substantially certain
that the entire net earnings of the
Standard from 1852 to 1906 were at
least S790,000,00O, and possibly much
more
These enormous profits have been
based on an investment worth at the
time of its original acquisition not
more than 5000, Co.,
Furthermore, the rate of profit
on the capitalization has increased
greatly. From 1882 to 1894 the net
earnings averaged about 10 per cent
on the capital stock or trust certi-
ficatss outstanding, while the aver
age net earnings for the period from
1903 to 1906 were about IS per cent
yearly.
Profits Startling
These rates of profits and their
great increase are strikingly con-
frmed by the known profits of one
important Standard concern. the
Waters Pierce Oil Company. The
lowest rate of profit on it's investment
was in 1S96-23.3 per cent 1t increased
In nearly every year thereafter until
In the first six months of 1904 the
profits were at the rate of 47.2 per
cent per year. Moreover, the rate of
not only in proportion to its invest
ment, but also per unit of products
sold. The average profit on iIlumin-
ating oil for the years 1895 to 1899 was
50 cents per barrel, while from 1900
TO June, 1904. the average profit was
$l32 per barrel, with similar increase
OF profits on the important by pro-
ducts
The industry may be said to have
been normally competitive from 1866
to 1874, and during that time there
was fall in margin between the
price of export oil in barrels and the
price of Pennsylvania crude of from
2S.75 cents in 1856 to 9.02 cents in 1874.
This decline was much greater than
that which has taken place since 1t
is conclusive evidence that further re-
duction would have been made in the
absence of any general combination.
Moreover, part of the reduction
which took place from 1874 to 1879 un-
der the Standard regime was due to
decrease in transportation costs and
IN railway rates, the rates on illum-
mating oil from Pennsylvania fields
TO New York in 1874 being 4 cents
per gallon, while during part of the
year 1879 it was not over l cent per
board pipe line during this later
period reduced the cost of transporta-
ton still further, and it must be re-
membered that the Standard was not
the originator of the idea of a
seaboard pipe line, but that the Tide
Water Pipe company, then wholly in
dependent, first built such line
Furthermore, the reductions in mar
gins since 1879 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 by-products In general,
even the export prices, which prob
ably show the situation most favor
ably for the Standard, show margin
during recent years not very much
lower than twenty-five years ago. In
1879 that margin was sos cents; in 1903
the margin was 4.9l cents and, as in
dicated above, in the last few years
domestic prices have risen much more
than the export prices.
The fact that the Standard does
nearly nine-tenths of the petroleum
business has been demonstrate in a
previous part of this report. 1t now
appears conclusively that the result
of this domination has been to in
crease the prices of oil paid by the
consumer, and correspondence to in
crease the profits received by the
Standard. 1t is not true to say that
only such great combination can
furnish oil at the prices which have
been charged.
Independent competitors, though
small and weak, do survive and do