RISE OF THE STANDARD OIL COMPANY 199 



what it is possible to sell for ; and we make from that the best 

 possible consensus of prices, and that is our basis for arriving 

 at the current price." In the period from 1895 to the pres- 

 ent, it may be added, the difference between the price of 

 crude oil and the price of refined oil has remained almost con- 

 stant, which shows that this power of fixing the price of 

 crude oil has not been abused, in spite of the fact that the 

 Standard Oil compan}^ during these years refined over 80 per 

 cent of the output of oil. 



By its control of the pipe line systems the Standard Oil 

 company maintains its advantages over the independent re- 

 finers of the oil regions. The practice of the pipe line com- 

 panies is to receive all oil produced in the wells with which 

 their pipes are connected, gauging the amount and recording 

 the quantity received from each producer. The producer may 

 then receive from the company at any time the value of his 

 oil in store at the price for that day, or, instead, may receive 

 pipe line certificates which are negotiable in the open market. 

 The company lays pipes without extra charge to new wells, 

 though they be fifteen or twenty miles distant. In the proper 

 management and extension of the pipe lines, more than in 

 any other branch of the business, is the necessity for large in- 

 vestments of capital apparent. In the early days of the in- 

 dustry the absence of these facilities completely demoralized 

 the business; and for the adequate management of the lines 

 no company except the Standard has been ready and able to 

 make the necessarily enormous investment of capital. With 

 their scant resources the smaller companies were unable to 

 respond to the slightest sudden demand for new facilities. The 

 Superiority of the Standard Oil company, in this particular, 

 was clearly shown in the sudden development of the McDon- 

 ald field in 1891. In July of that year the output of the 

 McDonald field was 3,000 barrels daily. By the middle of 

 August it had reached 15,000 barrels. By the first of Sep- 

 tember the Standard Oil company, through its ally the Na- 

 tional Transit company, was able to handle 26,000 barrels a 

 day; by the first of October it could handle 40,000 barrels a 

 day; and, when in November the production of oil reached 

 nearly 80,000 barrels per day, the capacity of the pipe lines had 



