But for the second time it came up against the hostility of the Standard Oil, which waged a bitter warfare in the Far East—the famous price-war of 1910.
The Standard Oil of New York considered China as its private property. It had taught the Chinese to use kerosene by distributing, free of charge, lamps inscribed Mei Foo, or Good Luck. When this method became too expensive it sold them at cost price, and when the Royal Dutch appeared as a competitor it was selling, in this way, two million lamps a year. With a population of 400 million Chinese, this produced an unlimited market for kerosene, for which, in comparison with petrol, the American demand is small.
The Standard tried to fight by selling refined oil below cost price in foreign markets, while keeping the price very high in America in the shelter of the tariff wall. It even went so far as to sell in the Far East 50 per cent, lower than in Holland, although the latter market was nearer the American oil-fields. At the same time the refined American oil, which was quoted in England at the end of August 1910 at 6-1/4d. a gallon, fell at the end of November to 5-3/4d., and in December to 5-1/2d. Deterding's receipts from the sale of kerosene were reduced by 3,750,000 dollars. But he would not give way. He did not leave China; he stood his ground and fought. Although his oil was of an inferior quality to that of the Standard, it was near at hand, and had not to be transported for long distances like that of its rival (which involved the latter in great expense). An agreement was finally made. The Standard, which had taken possession of the Chinese market in 1903, gave up 50 per cent, of that trade to the Royal Dutch. The latter's share has even been increased recently to 60 per cent. For the first time Deterding had conquered!
Perhaps he would not have triumphed so easily if the Standard Trust had not been dissolved just at that time by the Supreme Court of the United States. But two such powerful groups could not have continued indefinitely to struggle for the international market without making sure of some stability and limiting their respective zones of operation.
After many attempts they have come to an understanding.
In 1907 an agreement fixed the quota of oil that each group might send to the British market.
In 1912 an agreement of a similar kind put an end to the struggle that had been going on in the Far East.
The absence of a definite general agreement between the two great Trusts did not exclude the possibility of tacit agreements, which regulated their operations in the international market and assured to both an extraordinary prosperity. The Standard has several times made very tempting offers of close co-operation to the Royal Dutch, leaving this group free to make its own conditions. The Royal Dutch-Shell has always refused, for the future is its own. What will happen to the Standard, an almost exclusively American concern, when the oil resources of the United States are exhausted? Since 1919 it has been endeavouring to acquire oil-fields in the rest of the world, to guard against this danger, but everywhere it finds the "closed door." The Royal Dutch, aided by the British Government, has taken possession of all that remain in the world.