Cutting to Kill

oil, agents, standard, local, company, information, agent, business, independent and bookkeeper

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The local stations from which the dealer is served to-day are models of their kind, and one can easily believe they have always been so. Oil, even refined, is a difficult thing to handle without much disagreeable odour and stain, but the local stations of the Standard Oil Company, like its refineries, are kept orderly and clean by a rigid system of inspection. Every two or three months an inspector goes through each station and reports to headquarters on a multitude of details —whether barrels are properly, bunged, filled, stencilled, painted, glued; whether tank wagons, buckets, faucets, pipes, are leaking; whether the glue trough is clean, the ground around the tanks dry, the locks in good condition; the horses properly cared for; the weeds cut in the yard. The time the agent gets around in the morning and the time he takes for lunch are reported. The prices he pays for feed for his horses, for coal, for repairs, are noted. In fact, the condition of every local station, at any given period, can be accurately known at marketing headquarters, if desired. All of this tends, of course, to the greatest economy and efficiency in the local agents.

But the Standard Oil agents were not sent into a territory back in the seventies simply to sell all the oil they could by efficient service and aggressive pushing; they were sent there to sell all the oil that was bought. "The coal-oil business belongs to us," was Mr. Rockefeller's motto, and from the beginning of his campaign in the markets his agents accepted and acted on that principle. If a dealer bought but a barrel of oil a year, it must be from Mr. Rockefeller. This ambition made it necessary that the agents have accurate knowledge of all outside transactions in oil, however small, made in their field. How was this possible? The South Improvement scheme provided perfectly for this, for it bound the railroad to send daily to the principal office of the company reports of all oil shipped, the name of shipper, the quantity and kind of oil, the name of consignee, with the destination and the cost of freight.* Having such knowledge as this, an agent could immediately locate each shipment of the independent refiner, and take the proper steps to secure the trade. But the South Improvement scheme never went into operation. It remained only as a beautiful ideal, to be worked out as time and oppor tunity permitted. The exact process by which this was done it is impossible to trace. The work was delicate and involved operations of which it was wise for the operator to say noth ing. It is only certain that little by little a secret bureau for securing information was built up until it is a fact that infor mation concerning the business of his competitors, almost as full as that which Mr. Rockefeller hoped to get when he signed the South Improvement Company contracts, is his to-day. Probably the best way to get an idea of how Mr. Rockefeller built up this department, as well as others of his marketing bureau, is to examine it as it stands to-day. First, then, as to the methods of securing information which are in operation.

Naturally and properly the local agents of the Standard Oil Company are watchful of the condition of competition in their districts, and naturally and properly they report what they learn. "We ask our salesmen and our agents to keep their eyes open and keep us informed of the situation in their respec tive fields," a Standard agent told the Industrial Commission in 1898. "We ask our agents, as they visit the trade, to make reports to us of whom the different parties are buying; princi pally to know whether our agents are attending to their busi ness or not. If they are letting too much business get away from them, it looks as if they were not attending to their business. They get it from what they see as they go around selling goods." But there is no such generality about this part of the salesman's business as this statement would lead one to believe. As a matter of fact it is a thoroughly sci entific operation. The gentleman who made the above state ment, for instance, sends his local agents a blank like the following to be made out each month: The local agent gets the information to fill out such a re port in various ways. He questions the dealers closely. He watches the railway freight stations. He interviews everybody

in any way connected with the handling of oil in his territory. All of which may be proper enough. When, in the early eighties, Howard Page, of the Standard Oil Company, was in charge of the Standard shipping department in Ken tucky, his agents visited the depots once a day to see what oil arrived there from independent shippers. A record of these shipments was made and reported monthly to Mr. Page. He was able to tell the Interstate Commerce Commission, in 1887, almost exactly what his rivals had been shipping by rail and by river. Mr. Page claimed that his agents had no special privileges; that anybody's agents would have been allowed to examine the incoming cars, note the consignor, contents and consignee. It did not appear in the examination, however, that anybody but Mr. Page had sent agents to do such a thing. The Waters-Pierce Oil Company, of St. Louis, once paid one of its Texas agents this unique compliment: "We are glad to know you are on such good terms with the railroad people that Mr. Clem (an agent handling independent oil) gains nothing by marking his shipments by numbers instead of names." In the same letter the writer said : "Would be glad to have you advise us when Clem's first two tanks have been emptied and returned, also the second two to which you refer as having been in the yard nine and sixteen days, that we may know how long they have been held in Dallas. The movement of tank cars enters into the cost of oil, so it is necessary to have this information that we may know what we are competing with." * The superior receiving the filled blanks carefully follows them by letters of instructions and inquiries, himself keeping track of each dealer, however insignificant, in the local agent's territory, and when one out of line has been brought in, never failing to compliment his subordinate. But however diligent the agent may be in keeping his eyes open, however he may be stirred to activity by the prodding and compliments of his superiors, it is of course out of the question that he get anything like the full information the South Improvement scheme insured. What he is able to do is supplemented by a system which compares very favourably with that famous scheme and which undoubtedly was suggested by it. For many years independent refiners have declared that the details of their shipments were leaking regularly from their own em ployees or from clerks in freight offices. At every investigation made these declarations have been repeated and occasional proof has been offered ; for instance, a Cleveland refiner, John Teagle, testified in r888 to the Congressional Committee that one day in 1883 his bookkeeper came to him and told him that he had been approached by a brother of the secretary of the Standard Oil Company at Cleveland, who had asked him if he did not wish to make some money. The bookkeeper asked how, and after some talk he was informed that it would be by his giving information concerning the business of his firm, to the Standard. The bookkeeper seems to have been a wary fellow, for he dismissed his interlocutor without arous ing suspicion and then took the case to Mr. Teagle, who asked him to make some kind of an arrangement in order to find out just what information the Standard wanted. The man did this. For twenty-five dollars down and a small sum per year he was to make a transcript of Mr. Teagle's daily shipments with net price received for the same ; he was to tell what the cost of manufacturing in the refinery was ; the amount of gasoline and naphtha made and the net price received for them; what was done with the tar ; and what percentage of different grades of oil was made; also how much oil was exported. This infor mation was to be mailed regularly to Box 164 of the Cleveland post-office. Mr. Teagle, who at that moment was hot on the tracks of the Standard in the courts, got an affidavit from the bookkeeper. This he took with the money which the clerk had received to the secretary of the Standard Oil Company and charged him with bribery. At first the gentleman denied hav ing any knowledge of the matter, but he finally confessed and even took back the money. Mr. Teagle then gave the whole story to the newspapers. where it of course made much noise.

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