Q. Well, that is to increase profits, is it not?
A. Yes, to save from loss.
Q. Did it look to increasing in any way the benefits of cheapness to the consumer?
A. Yes, sir.
Q. How?
A. By steadying the trade. You will notice what all those familiar with this trade know, that there are very rapid and excessive fluctuations in the oil market; that when these fluctuations take place the retail dealers are always quick to note a rise in price, but very slow to note a fall. Even if two dollars a barrel had been added to the price of oil, under a steady trade, I think the price of the retail purchaser would not have been increased. That increased price would only amount to one cent a quart, and I think the price would not have been increased to the retail dealer because the fluctuation would have been avoided. That was one object to be accomplished. Moreover, there is only one-sixth of the oil produced here consumed in this country—a very small proportion of the product. In discussing what compensating advantage would arise from an increase of price, the railroad companies considered, in the first place, that there was a very great compensation afforded by a steady trade.
Q. Will you state to the committee how, with your mode of arriving at these conclusions, that cheapness to the consumer is promoted by stability in trade—how that arrangement which gave $1.50 a barrel to the South Improvement Company benefited either the railroad company or the producer?
A. Well, sir, in the agreement you will observe that the maximum rebates and maximum rates are stated. These maximum rebates were exceptions to the rule, which is a cardinal principle in the contract. The actual rates were to be kept as near to net rates as possible. Moreover, this was a contract which, before it was to go into effect, would have been a contract with the producer as well as the refiner.
Q. Does this contract show that?
A. The draft of a contract which I have presented to the committee, and which was to have been entered into with the producers before the contracts with the railroad companies went into operation, shows that.
Q. Does this contract say that anything was to be done in behalf of the producer before it was to go into operation?
A. Not on the face of the contract; it was only a condition on which it was delivered to me.
Q. A written condition so that it would become a part of the contract?
A. It was a part of the contract.
Q. I asked you whether there was anything in writing?
A. I said there was nothing in writing on the face of the contract, but nevertheless it was an essential part of it.
Q. It seems to be essential now that it should be a part of the contract?
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