| Show COMMISSIONER SMITH WHACKS STANDARD Oil hett L tt r to Roosevelt a arid d Report on the Price Policy of the Giant Cor Corporation CorI I General Advance in the United States While Foreign Countries Are Favored with a Marked Decline I I Washington Aug Knox I Smith commissioner of corporations bus hus flied his on the investigation of I Standard Oil prices price accompanied b by the folloWing letter of submittal Department or of Commerce and Labor LaborI Bureau of Corporations Washington Aug 11 In the business of selling sellin I petroleum products In foreign countries the tho price policy polley of the Standard Oil corn com cornI comI I nan pany has apparently been to sacrifice the tho Interests ot or the American consumer for forthe forthe the of securing the Standards foreign business which is a 1 ver vely Import Important ant mit one In 1001 over 55 per cent of the illuminating oil pro produced In thIs country countr Was exported of which the Standard ex exported exported ported about j per cent I IThe Time The relative movement of oil prices as distinguished from their absolute level has shown Ion for the last eight years a startling disparity between the United States and foreign markets particularly from 1902 1002 to ThO 1005 The rhe American price steadily advanced front 1817 to 00 The Now York ork export price advanced much less up tip to 1903 declining in lOOt and the Hamburg Gorman German price shows practically call cally time the same anic movement a as the New NewYork ew York export price while time the London price shows a stead steady decline from 1001 t to and a very veD Important drop during 1005 The course ourse of American and foreign prices in time the last live five years ears covered by this report has shown a greatly increased divergence in iii general time the American prices going up and the foreign prices showing a marked decline Still more remarkable Is the compari comparison son of the absolute level of prices las as distinguished from their movement of the United States and foreign markets The ThO statistics obtained for these compu computations were secured by at representative of time the bureau who visited the more Im Important important European countries and secured accurate and representative data Difference in Quality IL hould be n noted ted in comparing absolute absolute lute prices of AmerIcan with fo foreign eign mar that a difference of about 1 lent cent per gallon must be allowed for on account of the difference In the tho Quality of oil Jwo Hig th h r fn fin standard white whitO the basis of foreign prices etl Water white oil Is worth about 1 cent mote more than standard white Therefore I 1 cent per gallon should be deducted front from the differences between American prices and for ign prices The following sum summary mary statement shows t the averages lC cit the monthly prices for the th periods fled after r deducting transport costs and duties Average A United States price June 1903 to I Average German rice June 1903 90 to August 7 r fx Excess of U S price less 1 cent 20 O Average Unite States price January Januar to August I English price January Januar 1903 to August I Excess of r L S prices less 1 cent centT 2 I I Average T States price 0 October i to August Average Danish price October 1901 1 to August 1905 10 7 72 Excess of C 1 S price ies 1 cent 2 22 United States Septem her 90 Average Belgian price September tIro 61 i Excess of L C S price i less ss 1 cent 19 9 Average United States price Septem September b ber r 1905 96 Average price in the Netherlands September 70 Excess of U Ti S price less 1 cent 10 Similarly fOr the leding loading Oriental mar mal marKets Average net price In United States January 10 to May la I 86 Average net price in Orient January m 1903 to May 1 1905 9 48 I Excess of U S price less 1 cent 28 Margins Are Significant Again I it Is to be remarked that the I realy really significant figures arc the tho margins of the respective prices above aboe costs The he deduction of the principal element of cost throws Into prope proper prominence these great differences In prices From the prices ma may therefore be deducted first time the price of crude oi oil using Pennsylvania I crude as n a basis asis and secOnd the OP ope I rating expenses of piping refining and marketing the oi oil te about 2 cents per pcr glon gallon With these deductions for the respective periods above men toned time the average German margin was cents as compare compared w h 4 1 in the I I United State States the United Kingdom mar margin I gin was L cents as against in the United States and the tiie other countries I Holand Holland Denmark I Ind and nd the similar enormous disparities Even after f Ing 1 cent from th the American margins to 1 allow for difference In thear they are stil still front from one and to three times limes I as high as the foreign margins These remarkable discriminations in In fa I I vor 01 of foreign markets at the expense I of the consumer have natural I ly caled called forth excuses from the apologists I I or of the Standard The They have hae attempted to creat the that the rent recent in prices of American illuminating 01 oil abroad was necessitated by an aim over or of that product have ala also caime claimed that There here has Mn been svere severe corn eom petition against time the American mer Product from th time ois oils of Rus Rusa a td amid other for foreign eign countries and the reductions In export and foreign pre were Re necessary fr sary to retain the tho American export trade Neither of tl these se arguments is well 1 founded There was no 10 oversupply of t Ii II dl during the years ears lO 1901 and 9 at which time foreign price prices were wee severely cut Time The exports from the Unit United nit ld ed State States during Juring 19 1904 were le less than i im and Time The exports from the five Important Countries countries com show little more than a a normal increase The worlds production in 10 was vas le less than In 01 The exports front from the five prIncipal count s combined In If were more than 6 per cent less than thanin in 1901 There wa was an actual decline In Inthe inthe the total Imports Into the erle United King dom during lW as compared wih with ti two preceding years ers and a stil still more mor conspicuous decline dUring Notwithstanding standing this the prices In England fel foil enormously Time The import imports Into Germany German during 10 were almost exactly the same as during and the imports during 10 fel fell oft But the Ger German German man pric prices declined very ery materia materially 1 in both years The or of therefore do donot d not excuse the extraordinary ill iii foreign price prices In In I 19 9 IL and the s sumer i This decline Ic a ob was S not necessitated i t LUi td b by an any oversupply of ol oil In fact tl the movement of prices was ly the 0 op opposite pOlle of f which would liars have been expected from the change changes In supply Standards Arguments False Time The falsity of the tte Standards meats ments is further demonstrated b ti th fact that during 0 and 19 a when the Standard claims that an over ovel oversupply supply existed that company acua took large quantities of 01 oil In Russia to supply It its trade In Europe and amI tile the Ori On ent During 1904 It shipp from Russia Over Oer a million and a a baI half barrels of ii oi for or distribution In Eur Euro EuroPean pan and Asiatic countrIes I it ha has so cure cured lre large rude ermido production I in Rou Roumania mania and 1 has refineries there and In r counti for for foret or orI et t t k tf the St d I has hot ot alm ben been COI tnt corned with J the export tr traI In American Illuminating 01 oil but JM has b been solely Int interested in maintaining It its 01 domination in the market markets of the world worl 1 frequently States at the expense of the 1 I It Is true that during lO 1004 and amid 19 tim th Standard met ew competition In foreign markets but bitt ts new competitors w largely a group of concerns drw a considerable part of their supply from time the States State Having a monopoly at hoe home It has charged such prices as I it could thereby extort ad and the American Amerlan consumer er has had to py pay the these prices Meeting competition abroad I It lies given time the fOle Cumer consumer enormously lower price prices and It has us used the profits made at hom to maintain Is Its piton position abroad so s that the American consumer has been severely discriminated against for the purpose of oC maintaining not the dominance of American Amerlean export trade but I Ithe the dominance of a a particular combination which ha has used Is its power frequently aud conspicuously to the disadvantage of the public A sUI still more Important ald extraordinary any ary state of affairs apr appears I in time the con of prices In the United States A stud study o of time the Standards price policy has brought to light light as shown In this this re report report port a very ery remarkable system of dis in prices for the same pro prod I nets In dlf rent localities throughout this countI It is evident that the Standard charges a price which Is proportionate to the extent of Its In a given place and reduce reduces price prices In proportion to the meet degree or of competition which I it may Prices Not Uniform I It Is to be emphasized that there Is sub suh 0 no general market price for pe petroleum products illuminating 01 oil The Standard sels sells most of it its iu illuminating 01 oil In the State States directly to retail delers dealers at their own towns dellere delivered main mainly by tank wagons Consequently tie time prices are as asa asa a rule pure purely local prIces This system of distribution and price making puts it itIn In iii the tho power of the Standard to vary lt its price according to local conditions wih out disturbing prices In other localities Time The significance of the extraordinary difference differences In prices charged In man di dif different ferent of the country countr or in dif different I ferent tows towns can b be appreciated only in inthe inthe the light of the fac fact that a very smal small amount gallon constitutes a fair per galon mar margin gin of profit on the in ing and marketing of petroleum products A difference of about 7 mis mills pr per gallon galoR In time the pric price of illuminating 01 oil my may mean meana a difference bt between n a profit of 10 0 pEr pEron per peron on investment In refining and marketing and no profit at al au But the actual dl In time the Standards prices among competitive and noncompetitive tows towns townsand and amI areas area after making aU all allowances for differences in cOt cost of Production and dIstributing oren often amount to Several cents per gallon lon A combination which can command tIme the profits that thes these figures Imply over large aras areas has therefore ob obviously obviously a tremendous weapon when hen It en enters enters 01 aggressive Price cutting against t independent concerns Th The most accurate ald and complete dat data were obtained b by the bureau 01 on this sub Jet jett directly from th the records of time the Wa Waters Waters Pierce 01 Oil company a Standard con concern concern cern rho rhe territory of that company In Continued on Page 2 SMITH WHACKS STANDARD OL OIL Continued from Page 1 eludes Arkansas Oklahoma Indian Ter Territory Territory Texas and part ot of Missouri and Louisiana separated In these records Into seven divisions by the company compan In 19 1900 the profits varied from 09 cent In the St St Louis Louhi division to 4 cents per glon gallon In the north Texas division division The first six months of 19 1901 the profits were as follows St StLouis Louts Louis division 06 cent per gallon east Texas and Luisiana LouIsiana 18 cent cents Missouri 18 8 cents Arkansas 28 8 cents south Tex Texa Texas a as 33 cents central Texa Texas 3 35 cents north Texa Texas 44 cents showing an ex cx extreme rge range ot of profits and ot of coure course a correspondingly extreme range of net prices Similar Inequalities In local prices appear In the gasoline business of this company Discrimination n The data from other sources mainly from prices reported In December by over 50 retaIl dealers throughout 19 the country show even more startling dis In prices wholly able on any theor theory than that of the differences In competitive conditions and the use of a monopoly power These dis are shown In several ways was Taking the average prices for the s several verl states In December 19 1904 the lowest price appear appears In Delaware 77 cents per gl gal galIon lon Ion freight deducted ad and the highest In Ini i cents per galon gallon freight de de deducted ducted or more mor than twice as high Part nf dl the difference In this case l Is due to higher cost of refining and marketing or of time the Colorado 01 oil The difference In cost annot exceed 3 cents per galon which explains less than of the total difference of 4 cent cents difference In the price In several other ROCK Rocky mountain nrc and Pacific coast states the average price ot of illuminating 01 oil less freight for De December cember 19 1901 wa isas over oer 15 cents as com compare compared pare pared wih with 77 In Delaware fr freight de There Is difficulty In comparing state stat prides cs even en after dedUct dedUctIng deductIng Ing freight rate arising from the mincer r as t to th cot cost of turing the 01 oil Rold In different states This ho ver may be avoided by only those thoRe states which are supplied from z single refiner refinery or fr from m a group of 1 the s same me crude conditions 01 oIl and having i a s l o of Thus the ra of state aver ln th the states on or near neur the Atlantic seaboard Is very wide In In December lo 1904 the aver avert average t age price In Delaware less freight ks as al a aready rady ready stated pr lon In nl it W cents ent lii 1 w state ate JO 0 cenk t n 81 CT Carolina l r 3 New H hf 1 ts P q b S t egts S ln nn 1 par pa p pt O supplied ti ru m thi u S I so all with freight pc I ThE Thi than figr that hat for r Delaware is 53 cents higher r In In th t fr from w Lima Cleve Clee Cleela la n Whiting e r operating log ing n the prices freight It Hisa fangs fi train m 85 8 cents for tor OIo Ohio td Id Eft betiL fot fo it pitt of Arkanas Arkansas S b bl f One On of the most striking Instances Is in Cal California torn la where the Standard carries 01 oil from Its geat great reiner refinery near San Fan Fancis Fran cis o several hundred mie mileS by Water sater and ral rail and sells sens It In souther southern for several cents less than Is 15 charged for forthe forthe the same 01 oil In San Francisco The aver average average age price freight deducted for southern California In December 19 1904 was as 72 cents and the average for tor the norther northern part of o othe the state was cents Oregon supplied from the same source paid the price of I cents freight deducted and the state of Washington cents That these differences In prices are not due doo to In cost of marketing arsing arising from the density of population Is shown by taking the prices for lare large cIties in different part parts of the he country In the North Atlantic division prices freight deducted ranged In 19 1904 from 75 cent cents at Mass to 13 cents In Jersey City N J at the very door of the great er Ba Bayonne onne refinery of the Standard In the South Atlantic division th range Is from 79 78 cents at Richmond Va to cents at Jacksonville Fla Fia North dl di division vision from 64 cents In Cincinnat Cincinnati 0 to cents In S1 St Joseph Mo South Cen Central Central 10 division fr from m 7 cents In New Or Orleans Orleans leans La to cents in Litte Little Rock La 15 Ark Western Vester division 67 7 cent cents at Ls Los Ark cents at Butte Mont Angeles Cal Cal to cent Bule Mont Montal alt with freight deducted Ver Very little of the al difference |
