Standard v. Standard

Seven men and a corporate machine have conspired against their fellow citizens. For the safety of the Republic we now decree that this dangerous conspiracy must be ended. . . . Thus the Supreme Court of the U. S., 1911.

When John Pierpont Morgan I, pacing his office at No. 23 Wall St., heard the decision dissolving the Standard Oil Trust, he growled: "How in hell is any court going to compel a man to compete with himself?" Few blocks away at No. 26 Broadway, home office of Standard Oil of N. J., thin, aging John D. Rockefeller took a calmer view. "We must obey the Supreme Court," he advised his six associates. "Our splendid, happy family must scatter."

But Mr. Rockefeller knew very well that the happy family was not going to compete with itself. Shrewdly he had divided up the functions of the Trust so that each subsidiary dominated its field strategically. The Pacific Coast was, and is, ruled by Standard of California, the Midwest by Standard of Indiana, New England and the Atlantic Seaboard by Standard of New York and Standard of New Jersey. Each agreed to keep out of the other's backyard. The backyards became less clearly defined when huge, puissant Standard Oil of New Jersey chafed under restrictions limiting its domestic retail market while non-Rockefeller competitors like Texaco and British-controlled Shell could rove the whole union. In 1929 President Walter C. Teagle stepped out of bounds to acquire a company (Beacon Oil) with retail outlets in New England, province of Standard of New York (now Socony-Vacuum). Last month he put a subsidiary, Esso, Inc., on the heels of Edward G. Seubert of Standard of Indiana.

Esso built three service stations in St. Louis, painting the pumps and buildings red, white and blue--the precise colors of Mr. Seubert's stations. Although Esso displayed signs reading NOT CONNECTED WITH STANDARD OIL CO. (INDIANA), Mr. Seubert was furious. Last week he marched into a St. Louis Federal Court to file the first big lawsuit ever to disturb the live-and-let-live peace of the Standard Oil companies.

Mr. Teagle's trademark "Esso," complained Mr. Seubert, was merely the letters "S" and "O" spelled out. Standard of Indiana had been marketing "SO" oil & gas for 40 years. Therefore Standard of New Jersey, in advertising "Esso," was blatantly appropriating "without expense, fraudulently and unfairly, the goodwill, reputation, celebrity and public confidence which the plaintiff has built up." Mr. Seubert asked the court to enjoin the intruder from selling "Esso" products in any of the 14 states served by Standard of Indiana.

While Messrs. Teagle and Seubert were glaring at each other, Standard of New Jersey made an announcement which was immensely pleasing to Mr. Seubert. It reported earnings for 1934 of $45,619,000 against only $25,000,000 in 1933. Mr. Seubert was pleased because his company owns 1,778,973 shares--not very much less than the holdings of John D. Rockefeller Jr. (2,142,422 shares). From this stock, which Indiana Standard acquired in 1932 by selling foreign oil properties to New Jersey Standard, Mr. Seubert last year counted $2,224,000 dividends into his cash till.

Other oil news of the week:

P: A small independent oil company producing less than 4,000,000 bbl. a year is Simms Petroleum Co. of Texas. In 1929 it was making a tidy profit of $2,300,000. In 1931 it lost $2,651,000. Last October the company withdrew from the retail gasoline business, sold its service stations. Marketing activities practically ceased, two refineries were shut down. Last week Simms Petroleum sought permission from its stockholders to sell its chief subsidiary and biggest asset, Simms Oil Co., owner of most of the parent concern's oil properties, to Tide Water Oil Co. for $8,775,000 and interest. That left Simms Petroleum with a few wells at Smackover, Ark., refineries at Smackover and Dallas, a few miles of pipe line. Last week President Edward T. Moore wrote his stockholders: "Your Board of Directors has determined, subject to the approval by stockholders of the proposed sale, that it is advisable that Simms Petroleum Co. dissolve."

P: A financial axiom of long standing is that short-term debt, especially bank loans, should be refunded with long-term bonds. Lately many an oil company has taken advantage of low interest rates on bank borrowings to reverse the rule and retire long-term bonds with bank loans. Last year Gulf Oil Co. did just that and last week stockholders of Harry F. Sinclair's Consolidated Oil Corp. approved a plan for borrowing $40,000,000 toward retiring the company's entire bonded indebtedness of $46,000,000.

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