After 1870, there was no free competition in petroleum in France. The industry fell into the hands of the great firms which, sheltered behind the customs barriers established by the National Assembly at Versailles immediately after the Commune, formed a cartel enjoying a veritable monopoly, and apportioning the different regions of France. These ten firms did not compete. They fixed their prices in agreement and shared among themselves the quantities to be sold. It would have been impossible for an eleventh to establish itself in France without their consent. In the original cartel of 1885 there were only three members; round these the other existing refineries grouped themselves in 1893. Thus the Cartel of Ten was formed:—
Fenaille et Despeaux.
Désmarais frères.
Fils de A. Deutsch.
Compagnie Industrielle des Pétroles.
Raffinerie du Midi.
Société Lille-Bonnières et Colombes (L.B.C.).
Paix et Cie.
G. Lesieur et ses fils.
Compagnie Générale des Pétroles.
Raffinerie de Pétrole du Nord.
These were the ten firms which, protected by the ridiculously high customs tariff fixed on July 8, 1871, had monopolized for their own profit the sale of the petroleum brought in by the then all-powerful Standard. With a total capital not exceeding 100 million francs, they made for the ten of them a profit of 50 million francs a year.[39] Thus, France paid more for her oil than any other country in Europe. Protected by its agreement with the trusts by which it guaranteed them the monopoly of its supplies, the cartel did not exert itself. We had only 400 tank-wagons, 54 ill-organized depots, and 17 refineries. The process of refining in France has never employed more than 300 to 400 men, of whom just over a third were specialists.[40] Their fleet of tankers in 1914 comprised only 14 small boats of 3,000 to 6,000 tons, of which only three sailed under the French flag. The others were under the British flag "in order to profit by the less burdensome shipping regulations." It was a veritable humiliation for France, when, at the beginning of the War, she had to beg Great Britain to be good enough to return them. Britain had requisitioned them. If the two countries had not been allied, France would have been disarmed from the very first day! Eight of these ships were sunk during the War, and when the cartel was asked to build new ones it refused, "so as not to give offence" to the great trusts.
Except for Charles Paix, who made a disastrous attempt to the south of Cheliff in Algeria, none of the "oil men" tried to discover petroleum in France or her colonial empire, and so to endow the country with a real independent petroleum industry. They much preferred, with the aid of the Standard, to draw large profits without running any risks. A remark of M. Deutsch de la Meurthe on this subject has become famous: "The greatest misfortune that could happen to us would be to discover petroleum deposits." M. Barthe well remarked in the course of a comprehensive indictment: "Our oil magnates have been neither producers nor transporters of oil, and they have not even continued to be refiners." For, since the law of 1893, which lowered the import duty from 20 francs to 9 francs a metric quintal[41] for crude oil, and from 32 francs to 13.50 francs for refined oil, thus reducing the incredible difference of 120 francs a ton between the two, the Cartel of Ten has arranged with the Standard Oil to bring into France refined American oil with 7 or 8 per cent. of residual impurities, which it passes as crude oil, so frustrating the fiscal duty and realizing enormous gains. The understanding with the Standard was changed about 1904 to a close dependence; the Ten became nothing more than Rockefeller's representatives in France, his oil importers. The Standard fixed the quantities to be sold by each one and made them sign an undertaking to sell at the prices fixed by it at the beginning of each week. In the old refineries of Paris, Rouen, Bordeaux, etc., the agents of the Standard carried on a simple process of distillation, a mere pretence of refining, well-known under the name of "cracking." They imported a mixture of mineral spirit and petroleum, oil manufactured in America, a mixture which they had only to heat slightly in order to separate the volatile spirit (petrol) from the heavy constituents (petroleum oils). This fiction has always been admitted by the State officials. It has allowed really refined oils to come into the country as crude oil, paying the minimum duty. Millions have thus been lost by the State to the profit of a few privileged individuals.
Later on, when the cartel made an arrangement with André et Cie. that they should deliver Russian oil to it alone, the Standard wanted the agreement submitted to it for ratification, and laid down the condition that André et Cie. should only make deliveries in the proportions it decided upon.
Thus, the Standard was dominant in France up to the War, fixing prices and eliminating other importers. But, in spite of the lowering of the customs duties in 1893 they still remained so high that the Conseil Supérieur de Navigation Maritime, at its meeting of May 15, 1913, complained of the difficulties of procuring petroleum in France at "reasonable terms." Mazut, the price of which is very low, could not enter the country on account of the 9 francs duty, with which the legislature had burdened it without discriminating between various kinds of crude oil of greater or lesser value. In 1918, the world as a whole was consuming 30 million tons of mazut, France not one quintal. And her shipping was very much behind that of other nations with regard to the use of the Diesel engine. Very few of her vessels burned oil. "What absolutely prevents the fitting up of our ships" wrote the Under-Secretary of State for the Merchant Marine, in a letter to the Minister for Commerce on June 2, 1913, "is the exaggerated price of liquid fuel caused by the fiscal exactions." On July 21st, M. Charles Roux, president of the Comité Central des Armateurs, took steps to obtain a lowering of these tariffs. They were without result until 1919, the year in which M. Clemenceau got the Chamber to pass the law of August 7th, which lowered the import duties on mazut from 9 francs to 0.40 francs. At last the prohibitive customs barrier was broken down. The tax on coal was then 1.10 francs a ton. A ton of liquid fuel paid duties one hundred times as high (90 to 120 francs). From the fiscal point of view, this tax brought in nothing to the Treasury. It was so high that it prevented all importation. And thanks to that, also, France was left behind by all her rivals.
FOOTNOTES:
[39] Henry Bérenger, Le Pétrole et la France, p. 280.
[40] Le Page, L'Impérialisme du Pétrole.
[41] 220 lb.