Mr. Rice claims, in his preface to the collection of letters here quoted from, that he has hundreds of similar ones from different states in the Union, and the writer asked to examine them. The package of documents submitted in reply to this request was made up literally of hundreds of letters. They came from twelve different states, and show everywhere the same competitive method—cutting to kill. One thing very noticeable in these letters is the indignation of the dealers at the Standard methods of securing trade. They resent threats. They complain that the Standard agents “nose” about their premises, that they ask impudent questions, and that they generally make the trade disgusting and humiliating. In Mississippi, in the eighties, the indignation of the small dealers against Chess, Carley and Company was so strong that they formed associations binding themselves not to deal with them.
These same tactics have been kept up in the Southwest ever since. A letter, dated April 28, 1891, from the vice-president of the Waters-Pierce Oil Company, A. M. Finlay, to his agent at Dallas, Texas, says bluntly: “We want to make the prices at Dallas and in the neighbourhood on Brilliant and water-white oil, that will prevent Clem (an independent dealer) from doing any business.” And Mr. Finlay adds: “Hope you will make it a point to be present at the next meeting of the city council, to-morrow night, and do everything possible to prevent granting a permit to build within the city limits, unless building similar to ours is constructed, for it would not be fair to us to allow someone else to put up constructions for the storage of oil, when they had compelled us to put up such an expensive building as we have.”[[94]]
Mr. Rice is not the only independent oil dealer who has produced similar testimony. Mr. Teagle and Mr. Shull, in Ohio, have furnished considerable. “The reason we quit taking your oil is this,” wrote a Kansas dealer to Scofield, Shurmer and Teagle, in 1896: “The Standard Oil Company notified us that if we continued handling your oil they would cut the oil to ten cents retail, and that we could not afford to do, and for that reason we are forced to take their oil or do business for nothing or at a loss.” “The Standard agent has repeatedly told me that if I continued buying oil and gasoline from your wagon,” wrote an Ohio dealer to the same firm in 1897, “they would have it retailed here for less than I could buy. I paid no attention to him, but yesterday their agent was here and asked me decidedly if I would continue buying oil and gasoline from your wagon. I told him I would do so; then he went and made arrangements with the dealers that handle their oil and gasoline to retail it for seven cents.”
Mr. Shull summed up his testimony before the same committee to which Mr. Teagle gave the above, by declaring: “You take $10,000 and go into the business and I will guarantee you won’t be in business ninety days. Their motto is that anybody going into the oil business in opposition to them they will make life a burden to him. That is about as near as you can get to it.”
Considerable testimony of the same sort of practices was offered in the recent “hearing before the Industrial Commission,” most of it general in character. The most significant special case was offered by Mr. Westgate, the treasurer of the American Oil Works, an independent refinery of Titusville, Pennsylvania.
The American Oil Works, it seems, were in 1894 shipping oil called “Sunlight” in barrels to South Bend, Washington. This was in the territory of the Standard agents at Portland, Oregon, one of whom wrote to a South Bend dealer when he heard of the intrusion: “We will state for your information that never a drop of oil has reached South Bend of better quality than what we have always shipped into that territory. They can name it ‘Sunlight,’ ‘Moonlight,’ or ‘Starlight,’ it makes no difference. You can rest assured if another carload of ‘Sunlight’ arrives at your place, it will be sold very cheap. We do not purpose to allow another carload to come into that territory unless it comes and is put on the market at one-half its actual cost. You can convey this idea to the young man who imported the carload of ‘Sunlight’ oil.”
When John D. Archbold, of the Standard Oil Company, had his attention called to this letter by Professor Jenks, of the Industrial Commission, Mr. Archbold characterised the letter as “a foolish statement by a foolish and unwise man” and promised to investigate it. Later he presented the commission with an explanation from the superior of the agent, who declared that the writer of the letter did not have any authority to say that oil would be sold on the basis mentioned. “The letter,” he continued, “was intended to be written in a jocular manner to deny a claim that he was selling oil inferior in quality to that sold by others.” It is hard for the mere outsider to catch the jocularity of the letter, and it must have been much more difficult for the dealer who received it to appreciate it.
Independent oil dealers of the present day complain bitterly of a rather novel way employed by the Standard for bringing into line dealers whose prejudices against buying from them are too strong to be overcome by the above methods. This is through what are called “bogus” oil companies. The obdurate dealer is approached by the agent of a new independent concern, call it the A B C Oil Company, for illustration. The agent seeks trade on the ground that he represents an independent concern and that he can sell at lower prices than the firm from which the dealer is buying. Gradually he works his way into the independent’s trade. As a matter of fact, the new company is merely a Standard jobbing house which makes no oil, and which conceals its real identity under a misleading name. The mass of reports from railroad freight offices quoted from in this article corroborate this claim of the independents. The A B C Oil Company is mentioned again and again as shipping oil, and in the audited reports it is always checked off in the same fashion as the known Standard companies, and none of its shipments is referred to Standard agents. Independents all over the country tell of loss of markets through underselling by these “bogus” companies. The lower price which a supposedly independent concern gives to a dealer who will not, under any condition, buy of the Standard, need not demoralise the Standard trade in the vicinity if the concession is made with caution. After the trade is secure, that is, after the genuine independent is ousted, the masquerading concern always finds itself obliged to advance prices. When the true identity of such a company becomes known its usefulness naturally is impaired, and it withdraws from the field and a new one takes its place.
There is never a dealer in oil too small to have applied the above methods of competition. In recent years they have frequently been applied even to oil peddlers. In a good many towns of the country oil is sold from door to door by men whose whole stock in trade is their peddling wagons. Many of these oil peddlers build up a good trade. As a rule they sell Standard oil. Let one take independent oil, however, and the case is at once reported. His customers are located and at once approached by a Standard tank-wagon man, who frequently, it is said, not only sells at a lower price than they have been paying, but even goes so far as to clean and fill the lamps! In these raids on peddlers of independent oil, refined oil has been sold in different cities at the doors of consumers at less than crude oil was bringing at the wells, and several cents per gallon less than it was selling to wholesale dealers in refined. It is claimed by independents that at the present time the “bogus” companies generally manage this matter of driving out peddlers, thus saving the Standard the unpopularity of the act and the dissatisfaction of the rise in price which, of course, follows as soon as the trade is secured.
The general explanation of these competitive methods which the Standard officials have offered, is that they originate with “over-zealous” employees and are disapproved of promptly if brought to the attention of the heads of the house. The cases seem rather too universal for such an explanation to be entirely satisfactory. Certainly the system of collecting information concerning competitive business is not practised by the exceptional “over-zealous” employee, but is a recognised department of the Standard Oil Company’s business. In the mass of documents from which the reports of oil shipments referred to above were drawn, are certain papers showing that the system is nearly enough universal to call for elaborate and expensive bookkeeping at the headquarters of each Standard marketing division. For instance, on the next page is a fragment illustrating the page of a book kept at such a headquarters.