THE TRUST IN AMERICA AND ASIA
Hitherto we have been dealing with the history of the Standard Oil
Trust on its native heath, the United States of America. It is now time
to pass in brief review some of its operations in foreign countries.
It appears in many lands, this Protean conspirator, and always in some
new guise. Here it is the pioneer and prophet of native oil; there
it is the importer of vast floods of foreign oil. Itself protected
by a heavy tariff in the United States, it poses in other lands as
the chief of the apostles of free trade. It demands alike freedom to
enter foreign oil-fields as a prospector and foreign oil markets as a
retailer. In one country it is the advocate of high prices; in another
it is the ruthless undercutter of its competitors. Always preferring
secrecy to daylight, its underground agitations embrace the Press,
the politicians, and the public. It is not always easy at first to
discover who is behind a Standard oil agitation, but I shall give a few
clues which may assist the student of oleaginous origins.
Turning first to Mexico, we find that the Standard’s operations there
have been conducted under the name of the Waters-Pierce Oil Company
of Missouri, which is now after many years of falsehood admitted
to be a tentacle of the Trust. The history of the re-entry of the
Waters-Pierce Company to the State of Texas is a good example of the
Standard’s methods. There sits in the United States Senate one Joseph
Bailey, a Democrat of the deepest dye. A lawyer, an orator, one of
those pure-souled patriots who denounce in public the trusts and
monopolies, Senator Bailey was exactly the man the Standard wanted.
The full facts are given by Miss Ida M. Tarbell in an article in the
_American Magazine_ for January, 1908. The Texas Legislature passed
a sweeping anti-Trust law; under it the Waters-Pierce Company was
prosecuted from court to court until finally in March, 1900, the United
States Supreme Court sustained the decisions of the Texas courts, and
the Company was ordered to close up its business and get out. At this
point Senator (then Congressman) Bailey appeared, and for a fee of
$3,300 (charged on the Company’s books to “profit and loss”) succeeded
in obtaining from the Democratic Attorney-General of Texas two months’
grace. The Waters-Pierce Company finally transferred itself to a new
Company of the same name, which took over the entire business of the
original company, and Mr. Henry Clay Pierce, the manager, applied for a
charter for the new one. He swore that it was in no way connected with
the Standard Oil Trust, and that he owned 3,996 out of 4,000 shares.
Largely through the influence of Congressman Bailey the new charter was
granted. Four weeks later Bailey, who was always regarded as a poor
man, was able to buy the splendid Grape Vine Ranch at Dallas, Texas, of
6,000 acres--a singular coincidence, to say the least.
The new Waters-Pierce Oil Company went on trading until in the Missouri
proceedings in 1906 Mr. Henry Clay Pierce, the managing director, was
at last forced on to the witness-stand. He there admitted that he
only owned 1,250 shares of the new Waters-Pierce Company, and that
the Standard owned 2,750. He admitted quite frankly that in order to
evade the anti-Trust law of the State of Texas the Standard’s 2,750
shares stood on the books in his name from May, 1900, to September,
1904. During this period the dividends were sent to Mr. Bayne, of the
Seaboard National Bank of New York--a gentleman whose name my readers
will recall as appearing in connection with the Standard’s carefully
concealed ownership of the Security Oil Company of Texas. In June,
1904, Mr. H. C. Pierce was asked to transfer these 2,750 shares to Mr.
Van Buren, who happens, oddly enough, to be the son-in-law of Mr. J. D.
Archbold, whose name has appeared so often in previous chapters.
During all this time that the Waters-Pierce Oil Company was posing
as an “independent” business it was carrying on a very large and
profitable trade in the adjoining Republic of Mexico. Although there
are large natural deposits of petroleum in Mexico, the Waters-Pierce
Company preferred to import crude oil from Texas and Oklahoma, refine
it in Mexico, and sell it at a price which returned a profit of 600
per cent. on the invested capital. But the Mexican Government desired
to develop the natural resources of the Republic, and as they were
quite tired of the high prices of the Standard, which had a monopoly,
they granted large oil concessions to the Pearson interests, which are
headed by Lord Cowdray. The Pearson firm had executed large railway,
waterworks, and harbour contracts for the Mexican Government, and
they developed the petroleum resources of Mexico so rapidly that the
Standard, which was hampered by a duty of $4½ a barrel on all the
crude oil they imported, soon began to feel the pinch.
Then ensued the rate-war which lasted so many months in Mexico, but
which is reported to be now compromised. The Waters-Pierce Company
built a refinery in Mexico, and spent large sums in buying Mexican oil
lands. They cut prices so heavily that they sold oil under cost, but
the natural advantages of the Pearson interests were so great as to
render them impregnable, and the Eagle Oil Company was successfully
launched on the London market by Lord Cowdray’s firm to carry out
extensive developments on the oil-bearing lands they own. During the
bitter contest there was plenty of evidence of the existence of the
Standard’s Press bureau, the head of which gets the liberal salary
of $12,500 a year. Articles appeared in London financial newspapers
predicting the imminent ruin of the Pearson interests, and obviously
intended to stop the English investor from backing their flotations.
According to a statement recently published in the United States,
a more subtle campaign seems to have been carried out against
President Diaz, who favours the Pearson interests. Many officials
of the Government, including a son of President Diaz, have become
shareholders of the Pearson local oil company, being naturally desirous
of developing their national resources and of fighting this American
monopoly. Now under the title of “Barbarous Mexico,” an ostensibly
humanitarian campaign was opened in newspapers and magazines of the
United States of America against the alleged harsh treatment of the
Yaqui Indians by the Mexican Government. In the _Cosmopolitan Magazine_
of March, 1910, it was categorically asserted by Mr. Alfred H. Lewis,
one of the foremost American magazine writers, that this campaign had
been inspired by the Oil Trust. They were determined to be revenged on
President Diaz, and therefore they induced a number of well-meaning
Americans--who haven’t time to put down the public lynching of
negroes in the United States--to plead the cause of the unfortunate
semi-enslaved Yaqui Indians. I cannot prove this charge, but Mr. Lewis
says it is believed by Americans resident in Texas and Mexico. From
the nature of the case this allegation is difficult to substantiate,
but for the present purpose it is a sufficiently significant fact
that a writer of Mr. Lewis’s reputation should believe that such a
Machiavellian scheme is possible. That the Standard will stick at
nothing appears from the fact that when Lord Cowdray visited New York
in June, 1910, he was shadowed by their detectives. The Standard Oil
Trust issued a formal denial of this charge, but Lord Cowdray repeated
it and reaffirmed it in the _Daily Mail_.
Turning next to Canada, we find that the British flag has been no
protection against the Standard’s invasion. Here, too, railway
discrimination was the principal weapon employed, and this was aided by
the legislation which the Standard obtained at Ottawa permitting them
to ship their oil along the international waterways and the Canadian
canals in bulk steamers to Canadian ports, where it was easy to
transfer it to tank cars. In 1898 the late Mr. Henry D. Lloyd, author
of “Wealth Against Commonwealth,” wrote as follows to the present
writer with regard to these discriminations:--
My information came direct from the attorney of one of the principal
Canadian refiners. This refiner carried on his business with my book
at his elbow, and he told his attorney that precisely the things that
I had exposed in that book were there and then being done to him.
The discrimination was managed by some manipulation of the rates
with regard to shipments in barrels. The Oil Trust had barrelling
works of its own at certain points, from which it received rates at
discriminations that killed the profits of the home refiners who
did not have these central stations. The refiner I speak of was
prosperous, liked the business, and would have continued in it but
for this railroad discrimination. He made every possible effort by
appeals to the railroad people in Canada to remedy the wrong, but
found them as determined to favour the American Trust as railroads in
the United States.
Finally the Standard clinched the matter by purchasing a Canadian
refinery, which it runs as the Imperial Oil Company, a nice patriotic
sort of name which no doubt appeals to the Canadian public. With this
refinery and the railroad discriminations they are as powerful in
Canada as they are in the United States.
When one turns to the Far East it is surprising to discover that the
Standard has not had things all its own way. It does a huge business
in China and Manchuria in case-oil, but it has there had to fight,
first, Russian oil shipped in bulk, and, when that fell off, the
competition of the Dutch East Indies. Several of these islands are
very rich in petroleum, and, in my opinion, its failure to secure a
footing there was the Standard’s first great defeat. The story is told
with commendable bluntness and candour by Mr. Robinson, British Consul
at Amsterdam, in his annual report for the year 1897 (Foreign Office
Consular Reports, No. 2,054). He says:--
At present a very important question has been raised by the attempt
of the well-known American monopolist undertaking, the Standard
Oil Company, to acquire a footing in the Dutch East Indies by the
purchase of the shares of the Moeara Enim Company, an important
concession in Sumatra. An extraordinary general meeting of the latter
company was to have been held in the last days of February for the
purpose of ratifying the agreement with the Standard Oil Company, but
the Dutch Government has interfered by the categorical declaration
that no concession will be granted to a company under the control of
the American monster monopoly, and the meeting has naturally been
postponed. It remains to be seen whether the financial power of the
Standard Oil Company can be effectively resisted by such steps, but
the Government seems quite determined to use all possible means to
this end, and the course which it has adopted will certainly be a
popular one, threatened as Netherland India is by an “imperium in
imperio” of this description. The agitation against the Standard
Oil Company’s monopoly, in so far as this inflicts on this country
all the dangers and disasters caused by an exclusive supply of
low-flashing oil, is a constantly increasing one.
The result was that the Moeara Enim Company were unable to sell, and
the Standard has never been able to get into the Dutch Indies. Worse
still, the Moeara Enim and two other Dutch petroleum companies were
absorbed by the Royal Dutch Petroleum Company, and this in its turn
became in 1907 allied with the Shell Transport and Trading Company of
London, of which Sir Marcus Samuel is the head.
Briefly, the present position is that two new companies have been
created, in which the Royal Dutch and the Shell Company hold all the
shares. The Bataafsche Petroleum Maatschappij is a Dutch company with
a capital of 80,000,000 florins, which carries on all the pumping
and refining operations of the combine in the Far East, while a new
English company, the Anglo-Saxon Petroleum Company, with a capital
of £4,000,000, owns all the petroleum fields in which they operate,
and also the very large fleet of tank steamers formerly owned by the
Shell Company, in which their products are carried. They send into
London alone 80,000 tons of petroleum spirit annually through the
Asiatic Petroleum Company, their marketing agents. Last year the same
combination sent 10,000,000 gallons of this motor spirit into the
United States, supplying firms who were competitors of the Standard
Oil Trust. In 1909 the Royal Dutch-Shell combine took over the
business of many of their agents. For this purpose the Shell Company
provided additional capital amounting to £440,000, the Royal Dutch
put up £660,000, and the Asiatic Petroleum Company £200,000, making
an additional outlay of £1,300,000 for one branch of their business.
A large Roumanian oil company, the Astra, has been secured, and the
Shanghai-Langkat Company, which operates refineries in Borneo, has also
been bought out since the amalgamation of 1907. That amalgamation
has apparently been profitable to those engaged in it, for the Shell
Company’s dividend, which had been only 5 per cent. per annum between
1903 and 1906, rose to 15 per cent. in 1907, 20 per cent. in 1908, and
22½ per cent. in 1909.
Now the awkward part of this chain of events so far as the Standard
is concerned is that the whole petroleum world has been turned upside
down by the motor engine. In 1897 Mr. Paul Babcock, director of the
Standard, told the Select Committee on Petroleum that they had in New
York tanks full of naphtha which they could not sell. Mr. Bergheim, a
well-known Galician oil producer, told a City meeting the other day
that he could recall the day when his firm gave the naphtha to any one
who would take it away. Then the Standard with its control of the tank
installations and the selling agencies for reaching the consumer of
illuminating oil (or kerosene) was the master of the world. Now the
consumption of kerosene is threatened by electricity among the rich
and slot-gas meters among the poor, and it is the despised naphtha (or
benzine) which is in demand. Motor-cars, motor-cycles, motor-omnibuses,
motor-lorries, aeroplanes, all these engines are demanding petrol,
and it is the good fortune of the Shell combine that its crude oil
provides a larger percentage of benzine than the Standard’s American.
While huge quantities of benzine, for which there is an increasing
demand, are being sent to Europe by the Shell combine, the Standard
is left with its monopoly of kerosene, for which the demand is
decreasing. At the same time, the Sumatra and Borneo crude produces a
very profitable percentage of petroleum wax, for which there is also
an increasing demand, and there is a big market for the residue all
over the Far East as fuel oil. This is the real secret of the recent
“oil war,” which has broken out chiefly because the Standard finds
its supremacy challenged by wealthy and vigorous competitors, and is
trying to use its vast accumulated profits in a “rate-cutting” war. The
latest news in this connection was the intelligence that the Standard
is attempting to repair its initial failure of thirteen years ago by
obtaining petroliferous areas in Java and Sumatra. It proposes to do
this through the medium of the Holland-American Petroleum Company of
Amsterdam, which being nominally a Dutch company can legally acquire
this property. Whether the Dutch Government which took so strong a
stand against the Standard’s invasion in 1897 will consent to be fooled
by such an obvious device as this remains to be seen. But the fact
that the scheme has been initiated indicates the desperate straits to
which the Standard is reduced for benzine.
This is not the first time the Standard has come into collision with
the Shell. In September, 1904, the _New York Herald_ published an
interview with Mr. W. H. Libby, the foreign marketing agent of the
Standard in New York. This was a long “puff” of the Standard, and
contained the allegations that in the “rate-cutting” which had then
been going on the Shell Company had been reduced to serious financial
straits, and were selling oil falsely branded. As these allegations
were entirely false, the Shell Company brought an action against the
_New York Herald_ in the English Courts for libel, which ended in 1905
in a complete victory for the victims of Standard Oil calumny. Mr. J.
Eldon Bankes, K.C. (now Mr. Justice Bankes) stated on behalf of the
defendants that they had made inquiries into the matter and found that
the statements could not be substantiated, and therefore withdrew,
apologised, and paid the plaintiff’s costs as between solicitor and
client. As we proceed we shall find other points at which the Standard
and the Shell have collided, but the vital factor in the present oil
situation is the Sumatran benzine, which the Rockefellers failed to
secure in 1897.
Passing to India, the Standard had to fight for years with the Russian
oil exported in bulk through the Suez Canal, and is now pressed hard
by the Burma Oil Company, an undertaking mainly under Scotch control,
which has until recently had a monopoly of the Burma oil output. As
there is a tariff on American oil in India from which Burmese oil
is exempt, it was obviously to the interest of the Standard--which
thoroughly believes in tariffs at home--to get behind that obstacle
by being able to refine Burma oil and vend it in India. There is
another reason, and that is the large percentage of petroleum wax
which the Burma crude contains. There is a large and increasing demand
all over the world for wax, which is used for candles, chewing-gum,
the water-proofing of fabrics without rubber, and for many other
commercial purposes. In its desire to get a footing in this promising
field the Standard Oil Trust applied to the Indian Government for
an oil-prospecting licence in Burma, and was much grieved when the
Indian Government refused it. We come across that same Mr. W. H. Libby
flitting about India. In November, 1902, the Calcutta correspondent of
the _Financial News_ reports that this gentleman was trying to induce
the Bengal Chamber of Commerce to support his little scheme against the
Indian Government. The correspondent gives us a pretty picture of Mr.
Libby’s virtuous protestations:--
The representative of the Standard Oil Company seems to wish the
Bengal Chamber of Commerce to believe that the motives of his
Company were not wholly mercenary--that, on the other hand, they
were philanthropic, inasmuch as he says that “it was the intention
of the Standard Oil Company to encourage as many Burmese natives
as possible to enter the producing business, by aiding them in the
employment of modern machinery and modern methods, by providing them
with an immediate cash market for their crude oil, and by loans,
if necessary, at very moderate rates of interest, to the end that
production might be stimulated and an important industry created. The
Standard hoped to derive its own profits by economies in refining,
by materially improving the quality and value of the manufactured
products, and by distributing the said products in India and other
Oriental markets, where aggressive efforts might largely increase
existing consumption.”
We know, of course, that the Standard has always been willing to
encourage other people to undertake the risks of oil-well sinking,
but the idea of stimulating this speculative business for the benefit
of the natives of a semi-barbarous country is novel as well as
captivating. When Mr. Libby’s campaign failed in India he came to
London, and his claims were pressed on the India Office by the United
States Ambassador in London, the Hon. Joseph Choate. As the Ambassador
had often appeared for the Standard when at the American Bar, and as
he had himself once stated that he was a shareholder in the Trust, we
may be sure that his advocacy of the Standard’s schemes in Burma did
not lack either zeal or ability. But it failed, and the Trust cannot
get into Burma. The imports of all classes of oils from Burma into
Madras Presidency during 1909–10 amounted to £317,868, as compared with
£212,982 in 1908–9. In the same period the imports of American oils
decreased from £241,128 to £189,362.
RUSSIA, GALICIA, AND ROUMANIA
“One of our greatest helpers has been the State Department in
Washington. Our ambassadors and ministers and consuls have aided to
push our way into new markets to the utmost corners of the world.”
JOHN D. ROCKEFELLER _in_ “_Random Reminiscences_.”