Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-08-12

in fact even as between cities or states
most widely separated. only small frac-
ton of the difference in price. after deduct
ing freight, can be explained by differences
in cost either of marketing or of refining.
The rest is due to a consistent and wholly
unjustifiable policy of price discrimination
against non-competitive localities.
Policy of Standard Oil Company.
1.-THE evidence Is absolutely conclusive
that it is the policy of the Standard OIL
Company to take full advantage of all hon
competitive conditions to impose the high
est prices possible and to extend such nom
competitive conditions by aggressive price
cutting calculated to drive out rivals. The
enormous profits secured over most of the
country enable the Standard to carry out
this plan very effectively in those localities
where price-cutting Is demanded by this
policy.
These determinations in prices were
largely made possible by the widespread
system of discrimination in railroad rates.
the Standard Oil Company until recently
exposed by this bureau In it's report on the
transportation Of petroleum. published In
May. 1906. The elaborate system of rail-
road discrimination. extending. as it did,
over very large areas of the country. al
lowed the Standard to place its oils in any
given section where It happened to encoun-
ter competition at a cost much below the
cost to Its competitors"
1t Is declared by the commission that the
threat to reduce prices was alone sufficient
to keep out competition. Referring to the
sale of lubricating oil. the report continues:
"A special and important branch of the
OIL industry Is in the selling of railroad
lubricants. Certain very remarkable facts
characterize this business. The trade with
railroad companies Of the United States In
lubricating oils for rolling stock amounts
to about 100000 per year The Standard.
10 "a
OIL Company. which 1t controls. has an al
most complete monopoly therein, certainly
over % per cent Of this business.
An Unusual System.
1.-The system upon which the lubricating
oils are sold to the railroads Is somewhat
unusual. Each contract contains certain
invoice prices per gallon of OIL which are
to be paid unless reduced by other pro-
visions Of the contract These invoice
prices are excessively high. and are the
same in all contracts. But there is also In
each contract second factor. the mileage
guaranty By this guaranty the Oil COM
pany agrees that the cost of fabrication to
a particular road shall not exceed GER
tain amount per thousand miles run by
locomotives. passenger cars and freight
cars. These guarantees. unlike the invoice
prices, differ widely for the different roads.
By means of such mileage guarantees. the
net prices of lubricants to a given road
may be placed at the excessive invoice
prices. or at any desired amount below
them"
1t is declared that the Pennsylvania road
paid less for It's oil than any other road.
forty-bne roads paying as high as 4S cents.
Absolutely no satisfactory explanation
has been given for the excessive prices paid
by nearly all railroads., Mr. Smith con-
tinues. They must be attributed solely to
the fact that the Standard. which controls
the Galena Is powerful enough. either by
reason of it's enormous shipments of petrO-
leum products or by Its influence In finan-
cial circles. to induce most of the railroads
Of the country to pay excessive prices for
their lubricants"
He states that the Norfolk and Western
Railroad Company could have saved $4,000
a year by taking bid it had from an in
dependent company, but 1t declined to
do so.
Experience of Independent Concerns.
These illustrations" he says. ARE typi-
cal Of the experience Of independent con-
Germs IN attempting to sell lubricating oils
to railroads in competition with the Stand
ard Except in rare instances. they are
not invited to bid on contracts nor are their
offers to submit bids given any constdera-
ton, although the bids submitted and the
contracts made by some of them in recent
years show that they were ready and Of
half the invoice prices of the Galena, and
even less.
'As stated above, it Is fair to use the
prices paid by the Pennsylvania in judging
the country. The total amount paid by the
ninety-four roads for which the bureau has
for lubricating oils used on rolling
stock. in one year was $4.O67.974. Had this
the payments would have
been 81. 1856. 219. or $1.67S. 755 less than they
actually paid. These figures cover railroads
operating about 91.5 per cent OF the loco
motive and car mileage Of the country"
Conclusions.
After further examples to substantiate
these statements Commissioner Smith says:
1T is probable that the Standard. by
reason Of its undoubtedly great efficiency.
could, had 1t been content with reasonable
profits, have made prices to consumers
lower than would have been possible for
smaller concerns, and thus have maintained
Its great proportion of the business by
wholly fair and legitimate means.
The Standard Is. however. a most con-
spicuous example of precisely the opposite
Of a combination which maintains a sub
stantial monopoly, not by a superiority OF
service and by charging reasonable prices.
but by unfair methods Of destroying compe-
tition a combination which then uses the,
power thus unfairly gained to Cypress the
public through wholly extortionate prices.
1t has raised prices instead of lowering
them. It has pocketed all the advantages
Of its economies instead of sharing them
with the public and has added still further
profits by charging more than
smaller and less economical concerns could
sell for IL the Standard allowed them the
chance.
Some Of the unfair and Illegal means by
which the Standard has been able to do
this have been proved In the reports al
ready published by this bureau. namely.
railroad Determinations, wide-reaching in
extent and enormous in degree; failure to
perform the duties of a common carrier in
pipe line transportation. and unjust methods
OF destroying competition in that business:
and price discrimination of the most fla
grant character. By your direction. in view
Of the proceedings of the Attorney General
against the Standard OIL Company some OF
the more detailed evidence secured by the
bureau regarding price discrimination Is at
present withheld from publication; and the
same Is true regarding evidence OF other
unfair practices, the most important OF
which are the maintenance OF bogus indie
pendent companies, espionage over the bust
ness of competitors, especially by brtbing
employees to disclose their ship
ments and deception as to the quality Of
oils Sold.
TYPHOID AT TRENTON.
No Improvement of Conditions at the