|7.5 Conquest of the Pipelines|
|After having tried to destroy several pipelines developments,
Rockefeller saw that this was a much more efficient mean of transportation for oil. When
each barrel cost 40 cents to carry to the railroads, which then made the Standard pay 85
cents (against an official rate of $1.30), pipeline transport only cost 16 cents a barrel.
The success of the first experiments with pipelines was made by the Tidewater Company,
which had its own network of refiners. Rockefeller tried every possible mean to secure
control of the Tidewater, like making false rumors to be able to buy its stock at a low
price, and finally took control by alliance.
He applied to pipelines the methods that had been so efficient with refineries, and in 1879 he controlled most of the oil-gathering pipelines, those which connected the wells to the shipping points. These lines were organized under the name of United Pipe Lines.
At the summit of its glory, the Standard had thus a quasi monopoly on the US pipelines. more on pipelines
7.6 Expropriation of retailers
The avowed goal of de John D. Rockefeller was to take control of the whole oil business. This implied the capacity of leading the fate of each barrel of petrol, from the time it came out of the earth until it was burned in the housewife's lamp.
He still had to control the retailer network, those who sell kerosene to housewives and lubricants to factories.
|Some refiners had their own retailer network, others had
wholesalers (or jobbers) who then sold to groceries. To achieve total integration
of the industry he still needed his own retailers, which he promptly got.
Very soon the whole US territory was covered with local retailers working under close supervision by the headquarters. The same perfection observed in other parts of the process could be seen in the retailing : excellent service, quality product delivered on time. Informers, often employed by the same companies they were spying, told the Standard Oil of every move of its competitors. If for example a retailer had ordered oil from an independent refiner, an agent of the Standard contacted him and offered cheaper Standard Oil oil. If for some reason the grocer did not want to do business with the Standard, he was then visited by a pseudo independent refiner who offered him special prices. After all the independent producers oil had been evicted from the local market by a few month of such a price war, the kerosene price quickly rose again at its initial level in this region.
If their methods came to public knowledge, the directors of the Standard accused "excessive zeal" from their employees and promised to correct it. As Rockefeller said in a rare interview in 1890 « ... In a business as large as ours, conducted by so many agents, some things are likely to be done which we cannot approve. We correct them as soon as they come to our knowledge. The public hears of the wrong - it never hears of the correction.»
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