150 I. A. HOURWICH 



Q. Perhaps you might explain to the commission why 

 the production could keep up under these circumstances. 

 A. It is a speculative business. One man would come in 

 and drill awhile, get a thousand barrel well and grow rich. 

 The hope of that sort of thing led men to put a great deal of 

 money into drilling these wells. They all hoped to get large 

 wells ; they did not find them. More money has been put into 

 the business in ten years than has been taken out of it. Still 

 people make money often, though prices are low. There are 

 wells that run as high as 15,000 barrels a day. Of course a 

 man who has a well of that kind will make a large amount of 

 money. 



Thus, average prices do not repay the average cost of 

 production, which is considered by the economist ; a speculator 

 is not guided, however, by school books on political economy, 

 he figures upon exceptional gains and the improvement of 

 prices. The policy of the trust has largely contributed 

 towards making the oil business a lottery. Says Professor 

 Jenks, the expert of the industrial commission : 



"The independent oil producers have said much about 

 the arbitrary acts of the Standard in fixing the prices of crude 

 oil. The charge of arbitrary action is conceded by the Stand- 

 ard to be true in special cases. That organization has at 

 times in special localities raised the price of crude oil till it 

 has ruined a rival pipe line, which was also a buyer, and then, 

 on the absorption of the line, has lowered it again to the great 

 disadvantage of the oil well owners. At times, too, where it 

 has been almost the sole buyer of crude oil, it has kept prices 

 so low that well owners were practically compelled to sell out 

 to it; then it has raised the price." 



A few instances of price fluctuations are quoted here from 

 the tables compiled by Professor Jenks. From January to 

 July, 1884, the price per gallon of crude oil at Oil City fell 

 from 2.65 cents to 1.51 cents; from January to October, 1885, 

 it went up again from 1.69 to 2.50 cents; towards the month 

 of August of the next year it fell again to 1.48 cents. From 

 November, 1889, to December, 1890, the price fell from 2.58 

 to 1.60 cents. From November, 1894, to April, 1895, it rose 

 from 1.97 cents to 4.22 cents. From January to December, 



