It was these companies, rather than the Standard Oil, which set the pattern of complete integration in production, transportation, refining, and marketing. Integration was a development character istic of corporate growth and operations generally during this period, and, in the case of the oil companies, a natural one be cause of the high degree of mutual interdependence of the indus try's processes, especially pronounced in large-scale operations. For various reasons, it took years of remodelling for some of the divorced Standard Oil units to achieve the same degree of integra tion as these companies ; certain units were wholly marketing, or wholly transporting, or wholly refining companies. The first step was for some of them to get their own production, which they did promptly; the next, was to find marketing outlets for their re fined products. At the time of the dissolution and for several years afterwards, the Standard Oil companies did the bulk of the total business in petroleum products, but the new companies, in cluding The Texas Company, Gulf Refining Company, Phillips Petroleum Company, Sun Oil Company, and Sinclair Refining Company and many others, steadily cut into the business of the companies created after the dissolution of the old Standard Oil Company. In territory after territory, the proportion of the total business done by the Standard Oil Company originally operating in that territory decreased over the years. The second notable competitive development was the invasion of each other's tern tones by the companies into which the old Standard Oil Company had been separated. One of the first such invasions was that of New England by the Atlantic Refining Company, beginning in 1916.
Once a beginning had been made, the movement was very rapid, accentuated by the urge toward integration felt by most of the old Standard Oil successor companies. For instance, the Standard Oil Company (New Jersey), the parent company, was left with a very large share of the old company's refining capacity, much of which was concentrated in New York harbour. It was left without marketing facilities for its output, and sought as rap idly as possible to secure large outlets for its products. At hand was the then Standard Oil Company of New York, with limited refining capacity and extensive outlets in New York and New Eng land. At one time sales of gasoline by the Standard Oil Company (New Jersey) to the Standard Oil Company of New York were as high as ri,000,000bbl. a year. But as time went on the Standard Oil Company of New York, like most of the important companies in the industry, sought to make itself a well-rounded unit by ac quiring crude oil resources and expanding its refining capacity. The Standard Oil Company (New Jersey), needing outlets badly in New York and New England to replace its decreasing business with the Standard Oil Company of New York, had the alternative of invading the territory with new outlets or buying an estab lished marketing organization in that territory. It elected to buy the Colonial Beacon Oil Company, an established company. This was the start of the Standard Oil Company (New Jersey) into di rect marketing which later expanded to cover all the eastern sea board States and many States of the South and Southwest.
In the meantime, with the growth of motor car use, an amazing gasoline distributing system was evolving. Prior to the rise of automotive transportation, the oil industry was primarily an il luminating oil industry, distributing this product by tank wagon delivery. This method of distribution was ready at hand when gasoline came upon the scene, and, so long as the volume was small, its sale was conducted through the same channels as kero sene—the grocery store, the hardware store, and the blacksmith shop. Garages, however, were soon established for servicing auto mobiles and provided new outlets for gasoline. The garageman was the first type of gasoline dealer. Then there came the gaso line pump, and with it the filling station, dispensing gasoline and lubricants exclusively. Filling stations at first increased slowly, as cars were not on the roads in sufficient number or concentra tion to justify heavy investment. It is estimated that in 192o there were no more than 15,000 filling stations in the United States. But from that time on, filling stations gained terrific momentum, surging ahead with automobile production. As cars increased on the road, they presented the problem of keeping filled nomadic tanks whose thirst could be more fatal to the traveller than the horse's ; for the horse could reach the next watering trough, while a car would sputter out and "die" miles short of the nearest filling station or grocery store. This problem was solved by the wayside station, by pumps installed at roadside taverns, hot-dog stands, parking lots, and every conceivable roadside location, all getting their supplies through tank wagon delivery. As a creator of small business enterprise in cities and towns up and down the country side in the United States, gasoline has had no rival. Gasoline re tailing became the sole business of many, a supplemental source of income for thousands upon thousands more—all gasoline deal ers or commission agents.
This development had behind it not only the growth of auto mobile demand for gasoline but the break-neck speed of the in creased demand. In 1918 there were 6,000,000 motor vehicles in the United States ; by 1925 there were 26,000,00o. Moreover, dur ing the early 1920s the mounting supply of crude oil began to build up an economic pressure which sought relief in increased retail outlets. The oil companies did not command sufficient capi tal at that time to build filling stations rapidly enough themselves, so they vied with one another to gain more and more new dealers. In this manner a widely scattered army of dealer outlets was es tablished. Even with this, they failed to expand their outlets fast enough to carry off the growing supply, so the surplus was thrown on the wholesale market. Thus an opportunity was created for the entrance of the jobber who purchased this marginal sur plus of gasoline and disposed of it in direct competition with the companies from whom he purchased it and through dealers in direct competition with company dealers. The scramble for gallon age on the part of the refiners, or suppliers, involved at times price wars, and a generally unstable price market.