The History of the Standard Oil Company

by Ida M. Tarbell

PRODUCTS OBTAINED FROM THE DISTILLATION OF CRUDE OIL IN A REFINERY.

In 1872, the year that Mr. Rockefeller took things in hand, all of these original products had been greatly extended, as we have seen. Joshua Merrill had succeeded in deodorising lubricating oil, making it possible to put the petroleum lubricants on the foreign market, and in 1871 Mr. Merrill’s factory sold 50,000 gallons in England alone. By 1872 paraffine wax was being made in many factories, and one maker of chewing gum in Maine used 70,000 pounds that year. The foreign trade in all the products of petroleum outside of illuminating oil was already considerable.[^[158]] Many of the factories in making their oils gave them names; thus, Pratt’s Astral was a name for a water-white oil made by the Pratt works of Brooklyn. It was a high-grade oil, made exactly as the oil made by many other refineries, but it had a name—a valuable one.

PRODUCTS OBTAINED FROM THE DISTILLATION OF CRUDE OIL IN LUBRICATING WORKS.

The tables (pages 246–247) analysing the products of crude oil obtained to-day at the Standard factories show the results tabulated. Now all of the products in these groups could be made in 1872, but certainly there were not forty-six distinct products under the naphthas as the table shows—nor were there 174 refined distillates. In fact, these are not really products; they are rather brands. Thus, though the table shows twenty-nine different kinds of odorised or deodorised naphthas, the main difference between them is their name. The 174 refined distillates are really the different grades of illuminating oil which any factory can get, given the proper crude base, with a multitude of different names applied to catch the trade. Thus among these 174 “products” are thirty-three kinds of “Standard-white”[^[159]] oil and forty-one kinds of “water-white”[^[160]]—the principal difference between them being the different fire tests at which they are put out. The real service of the Standard has been not this multiplication of so-called products, but in finding processes by which a poor oil like the famous Lima oil could be refined. In the case of the Lima oil the Standard claims it spent millions of dollars before it solved the problem of its usefulness. The amount of sulphur in the Lima or Ohio oil prevented its use as an illuminating oil, for the odour was intolerable, there was a disagreeable smoke, and the wick charred rapidly. The problem of deodorising it was attacked by many experimenters, and was finally practically solved by the Frasch process, which the Standard acquired after spending a large amount of money in testing its efficacy. Probably sixty per cent. of the illuminating oil used in the United States now is manufactured from an Ohio oil base.

This multiplication of varieties is, of course, a perfectly legitimate merchandising device, but it is not a development of products, properly speaking. Nor indeed was it for discoveries and inventions that the Standard Oil Trust was great in 1882, or that it is now—it is in the way it adapts and handles the discoveries and inventions it acquires. Take the matter of lubricating oils. After a long struggle it gathered to itself the factories and the patents of lubricating oils, and it has developed the trade amazingly; for, while in 1872 less than a half million gallons of petroleum lubricants were going abroad, in 1897 over 50,000,000 gallons went. The extension of the lubricating trade was made possible largely by the discovery of Mr. Merrill referred to above. In 1869 Mr. Merrill discovered a process by which a deodorised lubricating oil could be made. He had both the apparatus for producing the oil and for the oil itself patented. The oil was so favourably received that the market sale was several hundred per cent. greater in a single year than the firm had ever sold before. Naturally, an attempt was made by other lubricating works to imitate Mr. Merrill’s new product. The most successful imitation was made by Dr. S. D. Tweedle of Pittsburg. The oil he put upon the market was considered an infringement by Mr. Merrill, who commenced suit against the agents handling it. The case was before the courts for some six years, and Mr. Merrill spent over $100,000 in maintaining the patent. The case was finally decided in his favour by the Supreme Court in Washington. During this suit the Standard Oil Company stood behind Dr. Tweedle, furnishing the money to defend the suit. When finally they were defeated they took a license under the new patent which Mr. Merrill was obliged to get out, and paid him a royalty on the oil until within about a year and a half before the end of the life of the patent, when they bought it outright for a large sum, Mr. Merrill reserving the right to manufacture and sell the oil without a royalty. Most lubricating oils from petroleum are now made after Mr. Merrill’s process.

Having obtained control of the lubricating oils, the Standard showed the greatest intelligence in studying the markets and in developing the products. It makes lubricants for every machine that works. It offers scores of cylinder oils, scores of spindle lubricants, of valve lubricants, of gas-engine lubricants, special brands for sewing machines, for looms, for sole leather, for dynamos, for marine engines, for everything that runs and works by steam power, by air, by electricity, by gas, by man, or by beast power. Now any lubricating factory can produce the six or eight primary lubricants. Given these, the varieties to be produced by skilful compounding are infinite. They can be made more or less viscous, flowing, heavy, light, according to the needs of the machines and the idiosyncrasies of individuals who run them. The man who runs a machine soon knows what oil suits him, and if his trade is big enough an oil is put up especially for him with a name to tickle his vanity. It may be exactly like a dozen other oils on the market, but having its own name it is reckoned a new product. Skilful compounders insist that they can duplicate any of the 833 lubricating oils of the Standard if they can have samples. Of course this close study of the needs of a market, and this adaptation of one’s goods to the requirements, are the highest sort of merchandising.

Unquestionably the great strength of the Standard Trust in 1882, when it was founded as it is to-day, was the men who formed it. However sweeping Mr. Rockefeller’s commercial vision, however steady his purpose, however remarkable his insight into what was essential to the realisation of his ambition, he would have never gone far had he not drawn men into his concern who understood what he was after and knew how to work for it. His principle concerning men was laid down early. “We want only the big ones, those who have already proved they can do a big business. As for the others, unfortunately they will have to die.” The scheme had no provision for mediocrity—nor for those who could not stomach his methods. The men who in 1882 formed the Standard alliance were all from the foremost rank in the petroleum trade, men who without question would be among those at the top to-day if there had never been a Standard Oil Company. In Pittsburg it was Charles Lockhart, a man interested in petroleum before the Drake well was struck, who had begun oil operations on Oil Creek in March, 1860, who had carried samples of crude and refined to Europe as early as May, 1860, who had built one of the first refineries in Pittsburg, and who was easily the largest refiner there in 1874 when Mr. Rockefeller bought him up. In Philadelphia, the largest refiner in 1874 was W. G. Warden of the Atlantic Refining Company, and it was he whom Mr. Rockefeller wanted. In New York it was the concern of Charles Pratt and Company, one of the three largest concerns around Manhattan—the concern to which H. H. Rogers belonged. Charles Pratt had been in the oil and paint business since 1850, and he had become a refiner of petroleum at Greenpoint, Long Island, in 1867. Before Standard Oil was known outside of New York the fame of Pratt’s Astral Oil had gone around the world. Mr. Pratt’s concern was rated at the same daily capacity as Mr. Rockefeller’s (1,500 barrels) in the spring of 1872, when the latter wiped up the Cleveland refineries and grew in a night to 10,000 barrels. Mr. Vandergrift, who united his interests with Mr. Rockefeller’s in 1874 and 1875, had been a far better known man in the oil business and controlled much greater and more varied interests up to South Improvement times. When he went into the Standard he controlled the largest refinery on Oil Creek, the Imperial, of about 1,400 barrels. He was president of a large system of pipe-lines, and he was a member of one of the largest oil-producing concerns of the time—the H. L. Taylor Company.

There is no doubt but that Mr. Rockefeller had plenty of brains in his great trust. It was those who had done business with him who were the first to point this out when critics declared that the concern could not—or must not—live. “There is no question about it,” W. H. Vanderbilt told the Hepburn Commission in 1879, “but these men are smarter than I am a great deal. They are very enterprising and smart men. I never came in contact with any class of men as smart and able as they are in their business. They would never have got into the position they now are without a great deal of ability—and one man would hardly have been able to do it; it is a combination of men.”