Meantime, enterprising gasoline dealers, not satisfied with one sta tion, started small chains which, in some cases, grew into large State wide chains. They invested the filling station with a line of services for the motorist that changed its name to "service station." During this time, the large refiners, from a small beginning in owning and operating a limited number of their own stations, went wholeheartedly into direct ownership—proceeding with the final stage of integration, that of gasoline retailing. They took over independent stations and chains, bought up expensive locations, built stations of architectural splendour, launched an era of super-service station extravagances. They took a leaf from their dealers' book and went further than they in complete servicing and variety of services and accessory lines. In 1929, retail integration was in full swing, and the result of all the ex pansion of stations and pump outlets by companies and dealers was a physically efficient, highly convenient but overdeveloped and conse quently high cost mechanism. Ubiquitous and duplicated service sta tion facilities constituted a phenomenon that never ceased to amaze the motoring public.
However, over-building and duplication did not involve the motor ist in the necessity of paying high prices for his gas. During these years, the price of gasoline actually went down, even to the extent of much more than absorbing mounting taxes levied against gasoline by more and more States. The average U.S. retail price in 1920 was 29.70 per gallon ; in 5929, 17.90 ; with State gasoline tax included, it was 29.80 in 192o, and 21.40 in 5929. Besides, the motorist from time to time received the benefits of drastic price wars, and he was being overwhelmed with free services. The downward trend of gasoline prices, even more pronounced in later years, was sufficient evidence of price competition in the petroleum industry, with, of course, com petitive drilling under the rule of capture, over-supply of crude oil and technological advances which increased the available supply of gasoline also factors.
Entrance into retail marketing was clearly an attempt, dictated by expediency, of the integrated companies to help stabilize the gasoline price market. From the very beginning, the suppliers generally as sumed the responsibility for establishing posted retail prices, which automatically meant the acceptance of responsibility for determining the retailer's margin. Thus, throughout the latter 1920s and early 193os, retail margins in many areas were set at 3 to per gallon ; but companies breaking into new territories, seeking dealers to expand their distribution, frequently offered 40, 50, and even occasionally 60 margins. Besides, they gave other inducements, such as free pumps and other equipment. The dealer's margin came to be known as a
"guaranteed" margin. Theoretically, at least, the dealer at the service station could sit back and watch a price war, pocketing his margin and letting the chips fall where they might on the supplying com panies. The high proportion of costs in a retail filling station which do not change as gallonage increases has always constituted a strong temptation to resort to price cuts in order to secure more gallonage. Retail station operators with "guaranteed" margins were prone to cut the posted retail price by secret discounts and concessions. The in tegrated companies with their own stations could not very well initiate price-cutting without embroiling themselves with their own dealers.
The depression starting in 193o spurred, rather than checked, the growth of gasoline outlets, for many individuals, finding themselves out of their regular employment, invested their limited savings in the gasoline retailing business. But the collapse of values hit the com panies having large investment in owned-stations. Moreover, integra tion of retailing had not worked out in a way to stabilize the vast and far-flung retail price market. Stations owned by integrated com panies still were but a small percentage of the total outlets, totalling at their peak about 33,00o in number against 164,00o independent stations and 579,000 secondary outlets, and accounting for not more than one-third of the total retail gasoline sales. Some of them began quietly to divest themselves of their own stations. In according to the Petroleum Administrative Board, approximately 7,70o stations out of the 33,00o company-owned stations had been transferred to lessees. The unloading trend very definitely was accelerated by burden some chain-store taxes and the more and more pronounced labour factor, with wages going up and hours going down, and later by social security legislation. In the State of Iowa in July 1936, a chain-store law specifically applying to gasoline filling stations, went into effect. This caused the Standard Oil Company (Indiana) to turn back to their original owners or to individual lessees, many of whom were company employees, all its owned- or controlled-stations in that State. Having done this in Iowa, the company acted similarly in following years throughout its extensive marketing territory covering 20 Middle Western States. The "Iowa plan" of voluntary disintegration was fairly launched. Other integrated companies, following the lead of the Standard Oil Company (Indiana) beat a precipitate retreat from gasoline retailing. By 1939 all but a handful of the 33,00o stations owned or controlled by the large oil companies in the early 193os were being operated by small-business owners or lessees, many of them former employees.