New-York tribune., 1907-08-05
OIL PROFITS IMMENSE.
REPORT TO PRESIDENT.
STANDARD Has Not Benefited Com
sumers. Ii Sans.


TO President Roosevelt by Herbert Knox Smith.
Commissioner of Corporations. concerning the
operations of the Standard Oil Company. In a
previous report tn means and methods of the
Standard were explained The present report
| sets forth the results of these methods and the
effect they have had on the consumer of oil and
the profits Of the Standard Oil Company II
deals with profits and prices showing just how
the manipulation of the oil industry by the
/ Standard has affected the pocS-tbooks of tho
American people
The Standard oil Company" Commissioner
Smith SAYS. is responsible for the course %
the prices of petroleum and its products during
the last twenty-five years. The Standard has
consistently used its power TO raise the price
Of during last years. not only abso-
Iutely. but also, relatively to the cost Of cruds
oil"
The Standard has said that it has reduced me
price Of oil that it has been benefit 70 the
consumer and that only great combination
like the Standard could have furnished oil at
| the prices that have prevailed
Each one Of these claims saws Commits
sioner Smith rs disproved by this report The
increase in annual profits of the standard tVi'
1906 20 1904 was S2I,.tp.otn
from 1882 to 1906 the report says were S''-'l'-
92e 9tl4 averaging thus 2f-t- per cent year
The dividends. however we're much less ti'dh
the total earnings 1t is substantially teI'd''
that the entire net earnings OF the Stdhddiu
from 1852 70 1905 we're at least Sd9"H"t"''
and possibly much more
| These enormous profits have been based on
| an investment worth at the time Of its oTIsinSA
| ACQUISITION not more than SIJ.OOoose
CRITICIsEs THE STANDARD,
| The following facts are proved" Mr. smith
! saws in his letter President Roosevelt trans
! rnit1ine the report The standard has not re-
/ duced margins during the period in which II
| has been responsible for the prices OF oil Dur
| ing the last eight years covered by this report
| dS9S 10 1900 It has raised both prices anu
| margins Its domination has not been acquired
| or maintained by it's superior efficiency but
! rather by unfair competition and by methods
| economically and morally unjustinable Fhe
| Standard has superior efficiency in running It's
| own business; IL has equal efficiency IN de-
| stroying the business OF competitors. 1t keeps
| for Itself the profits OF the first and adds 70
| these the monopoly profits secured by the sec-
/ ond Its profits far above the highest pos
| sfbIe standard OF a reasonable commercial re-
turn and have been steadily increasing: finally,
| the history of this great industry Is a history
of the persistent use Of the worst Industrial
! methods the exactiou Of exor0itant 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
In a few days another section NJ the report
| will be made public, setting forth the innpor-
tance Of price discrimination in restraining the
| business Of competitors and ausmentins the
profits Of the Standard
COMMISSIONER SMITHS LETTER.
Commissioner Smiths letter 10 the President
| transmitting the report to the President IS
follows:
Sir. have the honor to submit herewith ths
| part of the report the oil industry that deals
| with prices and profits
Of the most important parts Of the report. Pre-
vi0us reports this subjeCt-on the "Transporta
| ton of Petroleum and the Position Of the
Standard oil Company in Petroleum Industry
have dealt chiefly with the methods used by the
! Standard Company, the dominant factor in tho
INDUSTRY to secure and maintain that domination
and have described the extent ana character Of itz
control: that 10 say the facts already made pub
| lie had do with means and methods The
| present report the other hand sets forth ths
| results of such methods and the effect thereof
| The consumer and on the profits Of the Standard
| oil Company These results largely take the shape
Of prices They must stated in the form Of tables
| and computations. and the facts thus presented
| NAV o themselves seem abstruse and uninteTest
tuS- But from them are dedl.Sed more certainly
| than from any other form of evidence the con-
| cIusions showing the definite policies and tender
| Cies OF one great industrial combination haVlng
| serious Importance 20 the public because affecting
the conditions of living The Fundamental teudeu
cies displayed throw light on the great prob
lens of industrial combinations in which the coUn-
| Try especially Interested.
The Standard OIL Company IS responsible for tHe
course of the prices Of petroleum and Us prod
| ucts during the last twenty-five years \ former
| report demonstrated that this company has main
tained dominant position since 1874 The
| ent report forth with great completeness
| the course Of such oil prices during the more Pc
cent period practically for the last ten years long
! after the control of the Standard was completes
| and the industry had become well established u
then shows roughly the price history for the on
! tire period from 1856. practically since the be-
| ginning of the industry This gives oppor-
tunitv TO compare the course of prices during the
earlier competitive period with the course Of prices
| during the later mOnOpOlistiC period IL shows
| what these prices actually have been II also
shows that they would have been lower during
| this later period under normal competitive con-
ditions and in the absence OF any such oVeTshad-
! owing combination : has actually existed
/ These prices show directly the effect that ths
| existence of this combination has had upon the
| consumer. and also the results that nave accrued
/ 10 tive combination itself by way of profits We
| can thus arrive just conclusions as 70 the way
| IN which the Standard has used its great indus
| trial power
reduced the price of it has been benefit
| 10 the consumer and that only great comhins-
| ticn IKE the Standard could have furnished ell
! at the prices that have prevailed
| Each one of these claims is dsproved by this
| report
| STANDARDS STATEMENTS DENIED
| The Standard has consistently used it's power 70
raisa the price of during the last ten years not
only absolutely. but also relatively 10 the cost OK
I crude oil ,, =. -,
| broad founded upon vast number OF prices di.
rectv collected b. the buraa1 frCln tho'sandS Vt
| retai dealers throughout the country as Wen a.
| Or rher