The large refineries are fully equipped to per form all sorts of subsidiary operations. Barrels and boxes are manufactured by the hundreds of thousands from lumber grown on the company's own tracts. Thousands of tin cans for " case oil " are turned out daily without a human hand touch ing them from the time the sheets of tin are crimped until the completed cans are ready to be filled with kerosene for shipment. Glue, chemicals to be used in refining, paint, giant pumps for its pipe lines, even lamps and wicks are made in the Standard's works. The Standard buys nothing that it can make as well. Such is the result of concentration.
The two hundred and fifty refineries operated in this country thirty-eight years ago, when the first Standard Company was incorporated, have decreased to less than a hundred. The Standard controls only a score of the largest. Their lo cations are significant when compared with the original locations of Standard activity. Seven, including the largest two, are located near the im portant Atlantic ports, New York, Philadelphia and Baltimore, the one plant at Bayonne, N. J., covering nearly a square mile and employing over 6,000 men. A half dozen smaller plants are scat tered through the Appalachian region and the Ohio-Indiana field. The huge establishment at Whiting, Indiana, is at once convenient to Chi cago and for distributing to the great middle west and south. Others in Kansas, the largest at Neo desha; in Texas, at Corsicana and Chaison ; at Florence, Colorado, and at Port Richmond, Cali fornia, complete the access to every important sec tion of the country and for all lines of foreign trade.
The location of Standard refineries has greatly facilitated the perfection of a system of bulk dis tribution of petroleum products by means of tank stations and tank-wagon deliveries direct to the consumer. It has, in the same way, been of great assistance in killing competition. Eliminating the middle man by selling direct to the retailer or con sumer opens the way to all sorts of price discrimi nations. Selling at a loss in a competitive market to cripple a rival can then be recouped immediately by charging correspondingly higher prices in non competitive districts. In the face of such advan tages and methods, any rival must have enormous resources at the outset in order to wage success fully the inevitable "oil war," if it desires to ex tend its operations.
It is remarkable that all through the discussion of Standard power and success there is no mention of a monopoly of production. The so-called an thracite-coal trust owns or controls many of the mines, and the steel corporation controls the rich est of the iron-ore deposits. But the " Oil Trust," greater than either, strange as it may seem, has never made any concerted effort to secure gen eral possession of the oil wells. In fact, the Stand
ard had been thoroughly established in its monop oly of the refining business long before it entered this field of activity at all.
The rapid developments of the Lima-Indiana field from 1886 onward, offered the Standard a chance to secure a large interest in the district for almost nothing. The character of the oil made it useless to existing refineries as they had no means of removing the sulphur. The prices were, there fore, so very low that the producers and owners of property were glad to sell to the Standard, which had been steadily carrying on costly experi ments in refining in the effort to get rid of the sulphur and secure a desirable kerosene. Such a favorable opportunity for acquiring valuable prop erty at low prices could hardly be allowed to pass, especially since the experiments promised ultimate success and the Standard secured large holdings. Since then the Standard has continued to be an im portant producer, other wells having been added from time to time, mainly in the Appalachian and the new Illinois field. The annual output from the Standard wells, however, does not even now rep resent more than a third or, at the very most, a half the total in these Eastern fields, and prob ably less than one fifth the total for the whole country.
The reasons for this apparently contradictory policy of struggling to dominate the refining end of the business and neglecting the sources of the crude material are clear enough, and show the wis dom of the Standard management. If it so desired, the Standard could undoubtedly acquire the same degree of control over production as it enjoys over refining and selling, but monopoly owner ship of a natural resource would be likely to raise a terrific storm of the most bitter public opposition. By following its present course and posing merely as a buyer and seller of oil, with nothing to pre vent the entrance of competitors into the field, the Standard points to its superior ability, efficiency, and economy as the sole basis of its success. All the time, however, it enjoys in fact a very effec tive control of production through its ownership of the only efficient means of transportation. The element of risk in production has also been an im portant factor in influencing the Standard policy. By leaving all the risks of prospecting, drilling, and operating to individual producers, the Stand ard runs none of the many chances of heavy loss on unprofitable ventures. When everything is consid ered, owning the refineries and pipe lines is far more profitable and every whit as effective as own ing the wells.