1914 with various fluctuations. On the whole, the experience of this combination seems to be much the same as that of the others, that as compared with general commodities the prices of their finished product show a decrease.

PETROLEUM*

In considering Chart IV, showing the prices of crude and refined petroleum and the margin of difference between these, indicating the cost of refining plus the profit, it should be noticed that the figures for crude oil are given in bulk per gallon, the package not being included in the price, whereas those for refined oil are given per gallon, including the cost per barrel, which is usually reckoned at 2 cents per gallon. The cost of the barrel to the company would, of course, vary slightly, but 2 cents per gallon is the amount regularly reckoned in the "Handbook of Petroleum," and is probably a fair general average. This is in accordance with the usual system of quoting these prices.

Taking the chart as a whole, and noting the prices of both crude and refined oils as well as the margin, it is seen that this margin shown by line C represents the perpendicular distance between line B showing the price of crude petroleum, and line A showing the price of refined petroleum. This margin dropped much more rapidly during the early years of the industry than in the last twenty-five years. This is of course to be expected. During the early years of the industry the methods of production naturally improved very rapidly, so that the

*From report of the United States Industrial Commission, Volume I, until 1899; thereafter prices furnished through the kindness of H. C. Folger, Jr., President of the Standard Oil Company of New York.

cost of production was lowered. The general process of refining may be considered to have been thoroughly established in, say, 1877, 1878, and 1879, so that since that time the improvements have not so much lessened the cost as established the quality and lessened the cost of distribution. Many other improvements have of course been made, but these have been mostly in securing a better use of the materials formerly wasted, which now have become by-products whose manufacture is often very profitable. It would doubtless be practicable, if there were vigorous competition, to consider the cost of refining as much less than at an earlier period, on account of the profit from these by-products, even though the actual cost of refining itself had not materially lessened. The chart and the figures, however, take no account of the by-products, that not being practicable, but show merely the prices of crude and refined oil.

There has been since about 1872 more or less of an association among the oil refiners who have made the Standard Oil Company. Mr. Rockefeller and some of his associates who afterward became the Standard Oil Company, had indeed started coöperative work as early as 1867 and had organized the Standard Oil Company in 1870; but it was not until 1872 that there had developed any powerful association, and, indeed, it was not until the latter part of the 70's or early in the 80's that the Standard Oil Company had really secured control of a large portion of its competitors. This early association did not affect the margin so much as did the improved methods of production, and the margin kept steadily decreasing until about 1879 or 1880. The

Standard Oil Trust was formed in 1882. From that time on for a period of eight or nine years there was only a slight decrease in the margin. For one or two years, about 1893 and 1894, the margin was considerably lower, the smallest margin having been in the year 1894, shortly after the dissolution, as a result of a court decision, of the Standard Oil Trust.

After the organization of the Pure Oil Company in 1895 there was a decided decrease in the price of refined oil, which continued until 1898, but there was little decrease in the margin. The Pure Oil Company claims that the decisive fall of the price of refined oil in New York in 1896 was due to its competition. In March of that year it put some wagons on the streets in New York, selling oil. The prices dropped very rapidly, until Mr. Lee, the active man in the Pure Oil Company, says that they were really below cost. Mr. Archbold of the Standard Oil Company hardly agreed with that, but did recognize the fact that there was active competition at that time. It will be noted that during the years after 1899 until 1900 the margin seems on the whole to have lessened gradually, reaching in 1907-1908 a point lower than at any other time excepting 1894, while the price of crude oil has most of the time ruled high.

It is quite probable, too, that there has been an added cost of refining, coming from the increased cost of supplies. Refineries are constructed largely of iron, and deterioration in them is rapid. Since 1899 there has been a decided increase in the price of iron for a considerable part of the time, the price at times being more than double what it was for some years preceding