"The Great Oil Octopus."

Maoriland Worker, Volume 3, Issue 50, 23 February 1912, Page 3

"The Great Oil Octopus."

Story of the Development, Methods, Men, and

Results of " Standard Oil."

By London "Truth's" investigator.

(Copyright. All Rights Reserved.)

CHAPTER XII. ' (Continued.) Resignations. The capital of tlie company was at that date £1,01)0,000 in' £ shares. It is worthy of note that in 1907-8, at a period when Mr. Kooseve-lt and his party were out after tlie Trusts, Mr. Archbold, Mr. J{og<\rs, and nearly all the American directors id' the AngloAmerican resigned. In June last the directors were Mr. J. 11. Usmar, Mr. Thomas H. Hawkins, Mr. I'VE. Powell, Mr.. William P. McKendrick, of 22, Hiiliter street, E.C. (tho London address of the Anglo-American Oil Company, until it moved ku>t autumn to St. James's Park), and Mr. F. D. Asehe, of 26, Ifroadwyy, New York. Mr. Fred. D. Asche is a clerk in the export department of the Standard in New York. Thus, while in 1889 there were five directors resident in New York and one in Ijoudon, in 1910 there wore four directors resident in London aud one in New York—a somewhat significant reversal of the ratio. Mr. Jas. A. Maodonald, the gentleman already mentioned, ceased to be managing director in 190G, when his one share was transferred to the Standard Oil Company of New Jersey. The " Anglo" at Work. The advent of the Anglo-American Oil Company was the beginning of troubled times in ihe English petroleum trade. Mr. K-ookelVlior's motto, "Pay nobody a, profit," was put into force, and the Trust began to buy out or to starve.ont the various groups of middlemen who had 'hitherto been vending their oils to the' English consumer. Some evidence on that point was given to the Select Committee on Petroleum in 1897 by Mr. W. J. Leonard, of Carless, Cape! aud Leonard, Pharos Oil Works, Ilueknc;; Wick. Mr. Leonard stated that London was then tho only "free tuarVt" for other oil than Standard, since, although there were independent dealers in Liverpool, they had for several years a "selling agreement" with the Anglo-American Oil Company. Then came these answers : —

Tho Chairman: I want to know what there is to prevent you importing oil into Liverpool in competition with the Anglo-American Oil Company? A.: If w-e did this, of course tho Anglo-American Oil Company would at once put down their price, so that we should have to sell at a ruinous loss, and we cannot afford to compete with them; I mean, we are all afraid of them. If we sent oil to Liverpool, tJic Anglo-American price, instead of being nearly 3d. a gallon more than the price in London, would probably he something like 3<l. a pa lion loss than the. price in London." That would ho the immediate effect, Q.: Yes, but is there not a regular importation, and n,n increasing importation, gf Russian oil? A.: No, it is not an increasing importation; it is not, certainly. Of course, the Anglo-American Company are getting the whole business practically.—Report and Evidence, 1897. Q. 4831. This is how an "independent" oil merchant talked of the colossal power of the Standard Oil Trust at that date, and their influenco extended oven to the smallest transactions. When a great proportion of oil was still imported in barrels, at least one London firm did a very good business buying up the empty oil barrels from tho hawkers and small doalers, who used to collect them at the consumer's premises. The barrels wero well made, and the Standard gladly bought the empties to use again. But it found somebody else was making a living. This would never do. At once the Standard began to offer small inducements to the hawkers, and tho barrels went to tlieni direct, so that the small factor's business was killed.

Very interesting evidence was given by Mr. W. T. Rigby, secretary of the Liverpool Oil Dealers' Association, who was called in support, of the Standard's opposition to the raising of the flashpoint. Ho said the members of his association objected to tho AngloAmerican Company supplying so small a quantity as five gallons to small shows which had formerly been bu H - pfied by the small wholesaler. He went on: —

In tho first instance, when tha Anglo-American put their tanks on tho ground they gavo us their word that no 1c39 a quantity than 20 gallons would bo delivered, but when they found that the retail dealers t/i Liverpool would not embrace tho new system of tank-waggon delivery, bfl* preferred to take it in th© old stylo of barrels, thoy, in the words of thoir Liverpool manager, wore forced to administer a stab in our backs— this is, go really behind us and secure that trade which legitimately belonged to the chandler doing a small wholesale business, and and that is why they ("his association) aro objecting to tho delivery of anything less than ton gallons of oil. — Report and Evidence, 1897, Q. 6052.

"Tied Houses." Hut some of tho wholesalers, especially where in the provinces they had built up a good business which it would lie difficult for the Standard to capture, were allowed to remain as "tied houses" in the trade. Sonic evidence was with difficulty extracted by the Lord Advocate and Mr. HcKillop, M.P., at the same committee from Mr. Ceo. Rase, a large "independent" oil dealer of Norwich, who bad come up to give evidence in support of the Standard's views against raising the flash-point:— Mr. McKillop, MP.: Have you any freedom to use any (lass of oil you likoP—We prefer American oil. In fact, we have dealt in nothing else. Hace you a general freedom to use Russian oil, for. example, if you chooseP— Wo don't like Russian oil. Are you bound to any particular dealer* Are you bound to use American oil fr— Yes, that is so. That is hugely becau.se of. choice. You are under contractP —Yes. You are not allowed to sell any otherP—Yes, that is so. Mr. Vre, .\l.l\: What do yon mean by contract P7-I mean I have an arrangement at present in distributing American oil. Do you mean that you have a binding agreement with the Standard Oil Company to sell nothing but their oil for a specified periodP— So, not for a specified period. I'Vir an indefinite.period P —There is no period,' specified'whatever. ' Do you mean 'that you have a signed agreemen to this effect, "signed, sealed, and deliveredP" —If it is a binding agreement, it does not matter whether it is signed or not. Is that a common type of agreement with the American Company and its customers? —I don't know. Does it specify any price?— No. Does it preclude you from dealing in the oil of any other company?— Well, yes, it does to a certain extent. What happens supposing you have oil from any other company?— That I can hardly say, but I am perfectly at liberty to determine the agreement at any time I choose. Do you mean that breach of the agreement would not entail a claim for damagesP—lTo. Then what "consideration" do you get for entering into such -agreement P—Tlie consideration is the larger volume of business. But yon can without an agreement deal in it? —Yes. Why? You go into tin's agreement and can give mo no reasons for it. Is it in writing?—ln print. So that a great number of people eui-er into the same kind of agreement apparently?—No, I think not. Of course. I have no personal knowledge.—Report and Evidence, 1897, Q. 3470 et seq. We have only tn react the evidence of Mr. Leonard and Mr. Rigby,_and the American evidence already given, to understand why these "tied houses" exist.

In one portion of the United Kingdom the Standard Jias never been ablo to obtain complete control. Scotland is the earliest home of the mineral oil industry, and patriotism and caution alike induced the Scottish users of burning oils to prefer the high-flash oil which the Scottish companies refine to the dangerous low-flash petroleum imported by the Standard. Although the cheapness of tlie hitter's product has made considerable inroads on the former's trade in Iterosene, the Standard has never been able to kill it, and it has of lato made various proposals to the Scottish companies to take over their whole output of kerosene atul to distribute it by the tank system. The Scottish oil companies (who do a barrel oil trade) arc unwilling to supply tho Standard with all their output, for they know that tho Standard would by the tank distribution system kill the middlemen. Then, when 'it had made itself the sole channel by which kerosene could reach the scattered Scotch consumers, it might decline to buy any more Scotch oil and simply force its own oil on the purchaser. The Standard people are now attempting to push their own oils by the tank distribution system on Scotland, but aro meeting with strong opposition. The Scottish Refiners. But the strength of the Scottish companies is not patriotic so much as economic. They refine their oil from the shale, a soft, greasy, slate-like stono. Now so long as kerosene was the only thing tho refiner troubled about the Americans had tho advantage because Nature had done half the work of distillation for them in licr own laboratory, and instead of mining a stone, they got petroleum as a liquid. But the bottom is falling out of the keroseno trade, as I have already explained, and the Scottish companies aro recouping themselves on their by-products. At tho time of writing burning oils (kerosene) and lubricants aro lower than thoy have ever been, and it is certain that no profit i 3 being made out of them in Scotland. But the Scotch shale in distillation yields sulphate of ammonia, wluch is in good demand as a ferti-. lisor, and is not obtainable from either American or Russian crude. Naptftha

is also selling at a fairly good prioo owing to the development of tho motor industry—in fact, tho Standard has !>cou buying bug*.' quantities of it from certain Scotch companies. In tho past the Scotch refiners have been greatly assisted by the considerable percentage of paraffin wax which their crude yields, but in the last three or four years they have lost some of this advantage owing to the increased output of puratlin wax in Galicia. The Roryslav and Tustaiiovitch fields in that country produce an oil which yields from 1 to 7 per cent, of paraffin wax, and the production of paraffin wax has shot up very suddenly—which is no doubt one reason,why-the Standard has lieen fighting, so hard in Galicia. The net result is that the Scotch companies have a hard struggle to maintain themselves against the Standard monopolist tactics, but that on tho whole they hold their own. CTo be continued.)