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The CHAIRMAN. How can they accomplish that; does not the oil flow in the pipes across the State lines?

Mr. MARONEY. They do it upon a very fine legal distinction that a great many of us—at least, the laymen-can not follow; but they seem to have gotten by with it so far. The result of their avoiding common-carrier duties is, simply stated, this: That their lines are in the service of the private interests which have succeeded in building up a wonderful monopoly in the oil business. This has gone on for a generation, till the power of that monopoly over the business has become as nearly complete as perhaps it would be possible to make it, with the result that the monopoly, commonly known as the Standard Oil Co., is the absolute and unquestioned dictator as to the price of oil in every oil-producing district, and it invariably dictates that price in such way as to eventually not only control and be the only market to which the producer of oil may sell his product, but they are able to compel him finally to sell to them at their terms, terms fixed by the conditions which their power enables them to create, the very producing properties from which the product is taken. The profits in this are enormous.

I have a short statistical statement which I compiled for my paper something like a year ago, which gives the history of the dividends declared by the Standard Oil Co. during the 29 years of its existence as a trust, prior to its dissolution some two or three years ago. Another table gives the total barrels produced in each year during these 29 years, and another the value of that product for the whole country based upon the price paid by the monopoly to the producers for oil

. Those figures I wish to read in order to get them in the record; they are not very long.

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Mr. MARONEY. The point in the statement is this: In every year throughout this history the dividends paid to the stockholders of this concern have been from more than a third to more than a half of the aggregate value of the product to the producer.

Senator ROBINSON. How is that?

Mr. MARONEY. The dividends paid to the stockholders of this company have been in every year throughout the 29 years from more than a third to more than a half of the total value of all the oil produced in the United States.

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The CHAIRMAN. Does that mean the value of the crude oil ? Mr. MARONEY. The value of the crude oil at the well, Senator.

The CHAIRMAN. The value of the refined product may have been very much more.

Úr. MARONEY. Undoubtedly.

The CHAIRMAN. Have you any statement of the value of the manufactured product—the refined product?

Mr. MARONEY. We have not. We are here before the committee as producers, and our figures and our information relate to the crude article entirely.

The CHAIRMAN. That would, of course, appear to be a very startling proportion to the value of the crude product in the hands of the producer, and yet there might be such large expenditures in the way of refining and preparing it for the market as to make the $41,000,000 annual profit a much smaller proportion of the value of the product.

Senator GORE. I think Mr. Henshaw will be able to shed some light on that a little later.

Mr. MARONEY. A word answering Senator Newlands's last remark relative to profits: This table does not, for one thing, begin to state the profits of the business of this company, counting all its subsidiaries, side companies, surplus accumulated, and immense producing properties acquired since 1887, when producing was first taken up as a business by the trust. For another thing, it should be borne in mind that the capitalization of this trust was $98,000,000, generally admitted by authorities and claimed by its representatives to have been based upon an honest valuation of its assets at its beginning. It is easily capable of proof that in those years the aggregate of capital engaged in independent producing was far in excess of and in later years in the period many times $98,000,000. That is not taking into account independent refining and marketing. It is easily capable of proof, too, that the losses incident to independent producing in many of those 29 years more than equaled the profits, and in any year were not far from equal. Now, we are not seeking to show that the trust got half of this price paid for the product as its profits and then divided the other half with the independents, but to point that the division of profits and hazard between the two must be grossly inequitable when nearly half the gross value of the product measures the net “all velvet” profit to one party and some part of the gross value, surely not much over half, measures the gross return to the other party with immensely greater investments at stake.

The CHAIRMAN. In other words, you think a large proportion of the profits have really been laid out in acquiring new properties?

Mr. Maroney. In acquiring new properties; yes, Senator.

The CHAIRMAN. Notwithstanding these very large dividends were declared,

Mr. MARONEY. Notwithstanding that.

Senator GORE. Could you state the dividends declared by the Indiana branch of the Standard Oil Co.?

Mr. MARONEY. Year before last, or last year, the Standard of Indiana declared a stock dividend of 2,900 per cent and cash dividends, I think, of a hundred. Some member of our delegation has the figures on that.

Mr. HENSHAW. One hundred and twenty-nine.

Mr. MARONEY. The new stock had a book value until recently of about $350.

The CHAIRMAN. $350 a share?

Mr. MARONEY. Yes; above par. The situation could be explained partly thus: Our objection to the affiliation of the producing interests with the transportation of oil grow out of a number of facts that are very oppressive. For instance, in the oil field you or I may have a lease. And it is well to note here that it is invariably the independent oil man who goes out and makes the discoveries out of which grow our oil developments. You or I as independents may go out and get a lease and after drilling get a good well. We start to develop further; and, of course, our neighbors are more or less benefited by the discovery; value of adjacent territory is enhanced; there is a rush of others in there. Very soon it develops. Invariably it is the history of oil countries that one of these companies afiliated with the transportation monopoly is present with sease interests in our neighborhood. It has generally happened that the companies affiliated with the transportation enter the field, develop their properties as fast as they can, get what we call the cream of the flush production at once. The pipe line serves them to the exclusion of the rest of us; we find ourselves bound by our lease contract. Naturally we should prosecute the developments on our holdings as vigorously as they do. We have to protect our lands; we have to offset the wells drilled on adjacent property to protect our royalty-owning lessor against what we call in the oil country "drainage.” We soon find ourselves in the position of being subjected to enormous expense to prosecute this drilling. The pipe line, which is the absolute dictator of our market facilities, denies us the market. We are in a position where we have to sell; and will another independent holder like ourselves enter that market by our property? If such were the case we might hope to get reasonable value for our property when we sell it, but such is not the case. Anyone else taking the property, if unaffiliated with the transportation company, would stand in the same position as ourselves. ` Consequently the pipe line, or the producing interests that are affiliated with the pipe line, is the absolute dictator of what it shall pay to get our property.

This process has gone on in the older fields until, for instance, in Illinois, in less than seven years the Ohio Oil Co., which is the Standard representative on that ground, has acquired about 70 per cent of the producing properties of that State. Our State being newer, they have not yet acquired but about 30 per cent, although in some of the choicest districts they have acquired a majority of the choice properties, and at ruinous prices.

Senator GORE. Is it not the practice of the Standard Oil Co. not to wild-cat unproven wells, to let the independent producer do the wild-cating and put down the dry wells?

Mr. MARONEY. That is generally true, Senator Gore; there are some exceptions to that, but, generally speaking, their policy is consistently to follow the independent exploiter, entering fields only

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when the hazard of venture in opening new territory has been reduced by independent discovery.

Senator Gore. They let the independent assume the risk in developing the fields?

The CHAIRMAN. Is the company that conducts the pipe line in Oklahoma organized under the laws of that State?

Mr. MARONEY. No; the Standard Oil Co.'s avowed representative there is the Prairie Oil & Gas Co., which operates under a charter from the State of Kansas, I believe.

Senator ROBINSON. What other subsidiaries of the Standard Oil are operating in your State as producing or transportation companies ?

Mr. MARONEY. The Magnolia Pipe Line has lately entered the State, and 70 per cent of its stock is reliably stated to be held by Messrs. Archbold and Folger, of the Standard. The Oklahoma Pipe Line Co. is a subsidiary of the Prairie.

Senator ROBINSON. Do you know the Gypsy Oil Co.?
Mr. MARONEY. The Gypsy is a producing company.

Senator Robinson. Is it in any way, as far as you know, affiliated with the Standard?

Mr. MARONEY. As to ownership I do not know that it is or that it is not. I only know its policy in the general relationship which the producing side of that company bears to its transporting side, that is, the Gypsy Oil Co. bears to the Gulf Pipe Line Co. just exactly the relation of the Prairie on its producing side to its transporting side. It will engage in those squeezing processes at times the same as the Standard does.

The CHAIRMAN. How many pipe-line companies are there organized in your State and operating?

Mr. MARONEY. There are about five operating.

The CHAIRMAN. Are they at all competitive with each other with reference to the same oil fields!

Mr. MARONEY. The producer can not ever see any evidence of any honest competition between the five. If the Prairie announces a new price of oil this morning at 9 o'clock, in 15 minutes that same price is given at the offices of the others.

The CHAIRMAN. Are any of the oil companies treated there as common carriers of oil?

Mr. MARONEY. They are not.

The CHAIRMAN. Has there ever been any attempt directed against a pipe-line company or pipe-line companies that would act on them purely as carriers as distinguished from producers?

Mr. MARONEY. Answering that, Senator, the Texas and the Gulf pipe lines are themselves operating under charters which make them common carriers. They had to submit to the common-carrier provision in their charters in order to enter Indian Territory, under Secretary Hitchcock. But in practice they have probably never shipped any oil whatever as carriers for the reason that they publish a tariff to the shipper which is exorbitant. It comes to just a couple of cents a barrel less than the tariff which the railroads quote.

The CHAIRMAN. State that in terms. I think it would be interesting.

Mr. MARONEY. Fifty-five cents I think is the cost to transport oil from the field to the Gulf of Mexico by rail.

Senator ROBINSON. A barrel?

Mr. MARONEY. A barrel. Fifty-three cents is the cost by pipe line that they will quote you. But along with that they will submit you certain rules which themselves would be prohibitory, if you could pay the exorbitant pipeage.

Senator GORE. Have you had any estimate made as to what the real cost of transportation is, covering interest on investments, depreciation, and other charges?

Mr. MARONEY. Yes, sir. I would refer you on that point to a Government report, compiled by Mr. Herbert Knox Smith in 1906 and 1907, which goes very deeply into the cost and maintenance of piping oil, and it is sufficient to say here, in answer to the Senator's questioo, that it is less than a fourth, invariably, of the public quoted tariffs where such tariffs have been quoted.

The CHAIRMAN. Are these public quoted tariffs subject to the regulation of the public service commission of the State of Oklahoma, or has the power ever been exercised ?

Mr. MARONEY. I shall ask the Senator to keep that question in mind and put it to our Commissioner of Corporations here. It is a pretty big question and will open up some discussion.

The CHAIRMAN. Has the Interstate Commerce Commission ever exercised its power of regulating?

Mr. MARONEY. The Interstate Commerce Commission under the Hepburn amendment went to the extent of issuing orders to some 13 pipe lines to file with the commission their tariffs and their rules of shipments, and then the 13 of them went before the Commerce Court and there got an injunction against the Interstate Commerce Commission asserting jurisdiction over them, and the permanancy of the injunction is the question which is now pending in the Supreme Court.

The CHAIRMAN. Those 13 lines are not all in Oklahoma ?
Mr. MARONEY. They are not all in Oklahoma.
The CHAIRMAN. How many of them are?
Mr. MARONEY. Do you recall, Mr. West?
Mr. WEST. I am not sure.

The CHAIRMAN. How is it with reference to corporations organized under the law of Texas which accepted duties as common carriers under the law; were they not called upon to fix rates by the Interstate Commerce Commission and to obey them?

Mr. MARONEY. I think the whole matter is in suspense awaiting this decision, relative to them as well as to those who are parties in the case.

The CHAIRMAN. These cases where you say the companies operating under charters which devolved upon them the duty of serving as common carriers, are those charters under the laws of Texas or under the laws of Oklahoma !

Mr. MARONEY. They are under the laws of Texas. They organized domestic corporations, each one of them one in our State. Did they not, Mr. West?

Mr. WEST. Yes.

The CHAIRMAN. Have any of them constructed pipe lines and are they operating them?

Mr. MARONEY. Yes; they are operating pipe lines.
The CHAIRMAN. Are those pipe-line coinpanies also producing oil?

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