Follow the lines a little farther. Notice how, in 1892, the price of refined oil begins to fall, although crude is station ary. Notice how the refined line remains steady throughout 1893 and 1894, although the crude line steadily rises. This went on for nearly three years, until there was a margin of only three cents between crude and refined oil. The barrel, which is always reckoned in the official quotations of export refined oil, costs two and a half cents per gallon, and the price of manufacturing is usually put at one-half a cent. The cost of transporting the oil was not covered by the margin the greater part of the year 1894. Now, the Standard Oil Com pany were not selling oil at a loss at this time out of love for the consumers, although they made enough money in 1894 on by-products and domestic oil to have done so—their net earnings were over $15,000,000 in 1894, and they reckoned an increase in net value of property of over $4,00o,000—they were fighting Russian oil and the independent combination started in 1889. By 1892 this combination was in active oper ation. The extent of this movement was described in the last chapter of this narrative. At the same time certain large pro ducers in the McDonald oil field built a pipe-line from Pitts burg to Baltimore, the Crescent Line, and began to ship crude oil to France in great quantities. It looked as if both com binations meant to do business, and the Standard set out to get them out of the way. One method they took was to prevent the refiners in the combination making any money on ex port oil.
The extent to which cutting was carried on for two years, beginning with the fall of 1892, has been referred to in the last chapter, but is perhaps worth repeating in this connec tion. In January of 1892 crude oil was selling at 53% cents a barrel at the wells, and refined oil for export at 5.33 cents a gallon in barrels. Throughout the year the price of crude advanced, until in December it was 78/ cents. Refined, on the contrary, fell, and it was actually 18 points lower in December than it had been twelve months before. Through out 1894 the Standard kept refined oil down ; the average price of the year was 5.19 cents a gallon, in face of an aver age crude market of cents, lower than in January, 1893, with crude at 53% cents a barrel.
After two years they gave it up. It was too expensive. The Crescent Line sold to them, but the other independents were too plucky. They had lost money for two years, but they were still hanging on like grim death, and the Standard concluded to concentrate their attacks on other points of the combina tion rather than on this export market where it was costing them so much.
About the end of 1894 the depression of export oil was abandoned, as the chart shows. Notice that from 1895 to 1898 the margin remained at about four cents, that in 19oo it rose to six cents, and from that time until June, 1904, it swung between four and a half and five. The increasing competition in Western Europe of independent American oils, and the rapid rise since 1895, particularly of Russian oil, are what has kept this margin down. It is doubtful, such is the growing strength of these various competitive forces, if the Standard Oil Trust will ever be able to put up the margin on export oils. If there were only the American independents to reckon with, a compromise might be possible, but Russia, Burmah and Sumatra are all in the game. By 1896 Russia was exporting 210,000,000 gallons of petroleum products (America in that year exported over 931,00000o gallons), and these products were going to nearly every part of Europe and Asia. They began to cut heavily into the trade
of the Standard in China, India, Great Britain and France. By 1899 the exports of Russian oil were over 347,000,000 gallons; in 1901, over 428000,00o gallons. In China, India, and Great Britain particularly, has the Russian competition increased. While at one time the Standard Oil Company had almost the entire oil trade at the port of Calcutta, last year, 1903, out of 91,500,000 gallons imported, only about 6,soo, 000 gallons were of American oil. In China, Sumatra oil is now ahead of American, the report for 1903 being: Ameri can, 31,060,527 gallons; Sumatra, 39,859,508.
For the Standard there is good profit in this margin of four and a half cents for export oil. The expenses the margin must cover are the transportation of the crude from the wells to New York, the cost of manufacture, the barrel and the loading. For twenty-five years the published charge of the Standard Oil Company for gathering oil from the wells has been twenty cents a barrel. The charge for bringing it to New York has been forty cents, a little less than one and a half cents a gallon. It costs, by rough calculation, one-half a cent to make the oil and load it. The barrel is usually reck oned at two and a half cents. Here are four and a half cents for expenses—the entire margin. Where the Standard has the advantage is in its ownership of oil transportation. A common carrier gathering and transporting in 1902 all but perhaps io,000 barrels of the 1 so,000 barrels' daily produc tion of Eastern oil, the service for which the outsider pays sixty cents, costs it from ten to twelve cents at the most lib eral estimate. Here is over a cent saved on a gallon, and a cent saved, where millions of gallons are in question, makes not only great profits, but keeps down competition. The re finer who to-day must pay the Standard rates for transporta tion cannot compete in export oil with them. In January of 1904., when the chart shows the margin to have been about four and three-quarter cents, an independent refiner in the state of Ohio, dependent on the Standard for oil, gave the writer a detailed statement of costs and selling prices of products in his refinery. According to his statement he lost one and three-fifth cents on his export oil. He was forced, of course, to pay Standard transportation prices for crude and railroad charges for refined from Ohio to New York harbour.* That there would have been such a transportation situation to-day had it not been for the discrimination by the railways, which threw the pipes into the Standard's hands in the first place, and the long story of aggression by which the Standard has kept out rival pipes, and so been able for twenty-five years to sustain the price for transportation, is of course evi dent. To-day, as thirty years ago, it is transportation advan tages, unfairly won, which give the Standard Oil Company its hold. It is not only on transportation that the Standard to-day has great advantages over the independent refiner in the export market. As said at the beginning of this chapter, the Standard Oil Company "makes the price of refined oil" —within strict limits. Of course, making the market, it has all the advantages of the "inside track." Its transactions can