Iowa Way

To 3,000 oilmen who attended the 17th annual meeting of the American Petroleum Institute in Chicago last week there appeared a notable paradox. For while speakers lambasted Oil's perennial incubus of Taxation with might & main, many an oilman was ready to concede that in one instance, at least, Taxation had done the oil business good. The wonder worker was a particularly painful chain store tax which went into effect in Iowa in June 1935. Upon oil companies owning retail outlets it piled a new levy graduated steeply upward both on gross receipts and number of outlets. By last week it was apparent that this last straw, far from breaking the camel's back, had set it going with the wind. Oilmen trooping into Chicago's Hotel Stevens for the Institute meeting received with indifference the news that half of Iowa's chain tax had been invalidated by the U. S. Supreme Court.

The Iowa law forced the oil companies to make a radical change in their marketing methods. The companies simply got out of the retail business. To filling station operators they offered leases which made them, overnight, independent businessmen. Spreading rapidly into other States where rigorous chain legislation was in force or in prospect, the Iowa Plan became a national transformation. Beginning last January, great Standard Oil of New Jersey leased or sold 2,000 of its 2,500 company-owned Esso stations. Continental Oil disposed of every one of its 1,276 stations. Phillips Petroleum retained only six stations as training schools.

The Iowa tax was not the only worry the companies shook off by withdrawing from the retail business. For years--and during Depression especially--their wholesale and retail outlets were overbuilt, requiring them to place more emphasis on the volume of gasoline sold than on the profits made. By turning dealers loose more or less on their own, they automatically started shaking down an artificial market into a natural one. They were also pleased to think that by creating a somewhat diminished host of little fellows out of a regiment of cogs they were aiding in the Decentralization of business, favored at Washington.

To the Institute meeting last week came tall, bespectacled Wilmer R. Schuh, 34, of Milwaukee, with a white carnation in his lapel and blunt words about the response of filling station men to the Iowa plan. Mr. Schuh is president of the National Association of Petroleum Retailers, which was formed under NRA, includes more than 50,000 of the 170,000 filling station owners in the U. S. Mr. Schuh's principal job since the Iowa Plan was adopted has been to quell price wars among the new independents. Said he:

"The dealer views the Dealer Marketing Plan as something that has been foisted upon him by his supplier. ..."

Another convention comment on the Iowa way: "If toilet rooms are not now as clean as they should be, it will be agreed that the condition is well distributed."

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