In celebration of the eightieth year of continuous patronage by the people of the State of Ohio, The Standard Oil Company sponsored Sunday afternoon concerts of the Cleveland Orchestra which were broadcast during January, February and March, 1950. At the intermissions Mr. W. T. Holliday, Chairman of the Board of Directors, or Mr. C. T. Foster, President, talked briefly about this Company and the oil business. Their talks were intimate sketches of the history of Sohio. In response to the expressed desire to have copies of the talks they have been reprinted in this little booklet.
Birth of An Ohio Company...And An Era
W. T. HOLLIDAY
It is a pleasure for our Company to broadcast this delightful music by Cleveland's famous orchestra on the occasion of our 80th Birthday. While Americans were singing such robust and sentimental tunes as The Flying Trapeze, The Little Brown Jug, and Sweet Genevieve back in 1870, five men were organizing here in Cleveland an Ohio company to refine and sell the wonderful new petroleum oil. The world's first oil well had been drilled by Colonel Drake at Titusville, Pennsylvania, only eleven years before. The company these men were incorporating in Ohio was The Standard Oil Company which this week celebrates its 80th Birthday.
America had reason to sing the hearty new ballads of its popular composers. The dark days of the Civil War were over. And like the years following any war, our people were restless.
Portentous things were in the' air —
the newspapers were talking of great new inventions: such mechanical wonders
as the reaper, the typewriter, the sewing machine, and the clothes wringer.
America was stretching its imagination to build a better way of life. But
homes were still lighted by flickering
candles or by expensive whale oil lamps.
Thus it was that, in 1870, with this nation eager for new things, with the special needs of the day a new source of light and sufficient lubrication to make possible the great American industrial machine, The Standard Oil Company came into being, to supply kerosine for lamps, and oil and greases for the wheels of the industrial revolution which was just beginning. It was no mere coincidence that the beginnings of America's great industrial progress accompanied the development of petroleum. For in a very few years after our Company's birthday, the nation not only had a new source of light and lubrication, but also a new source of heat and power. We are indeed living in a petroleum age.
The present generation of the men and women of our Company, or Sohioans as we call ourselves, takes pride in recalling that our Company was one of the pioneers in the great oil industry which was so essential a part of our country's magnificent development in the last 80 years.
For 80 years our Company has concentrated
upon serving the people of Ohio. Once a part of a great national and international
business organization, in 1911, when that organization was dissolved, The Standard
Oil Company of Ohio became a completely independent company, not affiliated
in any way with any other Standard
Oil Company, not owned by any other company, but owned by over 19,000 stockholders,
34% of whom live in Ohio. Ohio is our market, but it is also our home, and we
are deeply grateful for all that Ohio has done for us.
January 8th, 1950
Optimism — Multiplied by 37,000
C. T. FOSTER
Oscar Wilde has defined an optimist as a man who says the bowl is half full when it's really half empty.
Fortunately, the oil industry has always had more than its share of the world's optimists. If that were not true it would never have been possible to discover, refine and deliver gasoline to Ohio, for example, all for about three cents a pound. Few other things you buy today cost that little.
Let me illustrate with a bit of optimism from our own experience. In order to supply our Ohio customers we have to look for oil in many states. Last year at this time we had every reason to be downright pessimistic about a lease we'd taken on a Louisiana swamp. There were some indications that we might find oil. The trouble was that our location was a mile and a half from solid ground, entirely covered by water and utterly inaccessible. First of all we would have to build a road over the swamp to our holdings. After that we'd have to erect a dike, and pump the water from the land. And then only could we start to drill.
Well, we looked over the prospects and
decided that the bowl was half full. We built the road and the dike. That cost
$35,000. Then we began drilling. At about
two miles down, we hadn't struck oil nor any sign of it. By that time we had
invested $90,000 in the project and our optimism was beginning to be sorely
taxed.
We called in our geologists and engineers
and asked what we should do now. They had a suggestion, but it was expensive
. . . they told us to come back up to a depth of 5,477 feet and at that point
drill out an angle of five degrees from the vertical. That would point our drill
in a new direction, and we just might be fortunate enough to hit the edge of
a pool.
Well, some of us had begun to think that our bowl of optimism was running pretty low, since a ninety thousand dollar loss on one well is hard to explain to 19,000 stockholders.
We went ahead with the expensive new procedure . . . twenty, thirty, forty thousand dollars worth. Then, on April 19th last year, Burnell Well No. 1 came in as a producer. If the oil doesn't run out for a few years we'll get back the $167,000 it cost us to drill that well.
If you multiply our experience on Burnell Well No. 1 by 37,000, the number of new wells drilled by the American oil industry last year, you have some idea of the incurable optimism of the oil industry—an optimism that has given Americans 28 times as much service from petroleum as any other people in the world.
January 15th, 1950
Ohio Pioneers in 1870
W. T. HOLLIDAY
Eighty years ago this month, a Cleveland newspaper carried a news item under the title "Business News." All the news story said was: "January 10 marked the incorporation of the Standard Oil Company in Cleveland. The business was instituted with a full paid capital of $1,000,000."
Eighty years doesn't seem to be such a long time. But in terms of industrial and social progress, the year 1870 goes back to a strange dark age that is almost beyond recall.
In 1870, 9,000 infants, a high percentage of those born that year in Ohio, died at birth or shortly fell prey to the dread smallpox or diphtheria or whooping cough.
In 1870, there were 6,000 miles of improved roads in Ohio—improved, that is, by planks or crushed stone. The first hard surface road was still more than a decade away.
In 1870, no municipality in Ohio operated a water system adequate for the needs of the people. Water came, for the most part, from community wells.
In 1870, city streets were foul-smelling,
disease-ridden thoroughfares, alive
with rattling carts, hawkers, hand organs and stray dogs.
Homes were heated, for the most part, by fireplaces and pot-bellied stoves. Fire losses were appalling and discomfort was universal.
In a very large way petroleum has helped to change all those things. Petroleum today furnishes asphalt for our modern roads and sanitary streets, lubrication and power for machinery and transportation, safe heat and comfort for homes—yes, and even drugs for our health.
It is interesting to remember that the energy, enterprise and investment of our Ohio businessmen back in 1870 helped hasten the kind of living we have today. While Standard Oil was being founded here in Cleveland, Dr. Goodrich in Akron was starting a company to make better fire hose. In Dayton, James Ritty had taken out patents on "a mechanical money drawer." From Springfield, home of the famous "Champion" farm machinery, came designs for pipe joints, wire fences, car couplings and seed-planting machines. In Canton, Albert Ball had developed his "New American Harvester" and sold 10,000 of them in a single year.
With the coming of petroleum, tiie "Nation" magazine was prompted to remark, in the very same year The Standard Oil Company was founded, that it was "perfectly safe to assure the inventive talent of this country that flying machinery may have a future."
Yes, in 1870 a wondrous new era in the
history of mankind was dawning.
And as we Sohioans celebrate the 80th birthday of our Company, we believe we
can say an even greater era lies ahead. We need only the kind of enterprise
and faith and confidence our forefathers had to make our own dreams come true.
January 22nd, 1950
Joe Jeekus, a Sohio Dealer
C. T. FOSTER
Security is a very fashionable word these days. It is much in the news and in public speeches. Whenever we hear the word, we like to think of a young man named Joe Jeekus (Czykuc).
Joe came to us a few years ago with a straightforward proposition. He wanted to learn the service station business. He explained that he had twenty-eight hundred dollars saved up and some day he wanted to use it to go into business for himself. If we would give him an opportunity to learn the business, chances were he'd invest in us.
Well, Joe went to work in one of our stations, in Rocky River, outside of Cleveland. He was a good man right from the start. He's a big fellow with a friendly smile and keen blue eyes. Soon he was managing a large station and making friends by the hundreds.
Last October Joe figured he was ready to start on his own. One of our independent dealers in Rocky River was about to retire and we suggested that Joe go over and see him.
Joe leased the station on the same terms
the man before him had had it. It was a modern building in a good
location on Route 20 at the intersection of Wooster and Center Ridge Roads.
When Joe took over he inherited a payroll of nearly a thousand dollars a month. Overhead and fixed expense amounted to some four hundred dollars a month.
He also had to buy the inventory from the former owner and that took most of his savings. A friend loaned him an additional fifteen hundred dollars and Joe started in business.
The station had been selling 18,000 gallons of gasoline a month, Joe jumped it to 22,000 the first month. He met his payroll, his rent and expenses and made a small profit. He put the profit immediately into an inventory of accessories.
Soon Joe was invited to the businessman's carnival in Rocky River. It meant that he'd have to hire a man to replace him for the afternoon, and certainly he'd have to spend some money. He hired the man and determined to spend thirty-five dollars at the carnival. And it proved to be a good investment. He met the owner of a dry cleaning firm, a hardware merchant, a dairyman, and a manufacturer of hospital supplies, all of whom operated three or more delivery trucks. Joe solicited their business, offering in return, a complete inspection of every vehicle at regular intervals. And he got the business.
He set aside an hour every day to call
on folks in his area, leaving his
card and offering to help them out any time they had automobile trouble.
Well, Joe's gallonage jumped to 32,000 last month. He has a new $600 cash register all paid for and an inventory worth $5,500. Next month he will draw his first pay check. Until now he's put everything back into the business.
Now the way Joe Jeekus looks at it, he can't fail if he continues to give a little extra service, and he's determined to do it. To Joe, and to us, too, that is security . . . the only kind that counts.
January 29th, 1950
Integration
G. T. FOSTER
Those of us whose lives have spanned the first half of the Twentieth Century have learned to accept the marvels of our time . . . perhaps without real appreciation. What a miracle it would have been fifty years ago to be driving an automobile in February; to travel from coast to coast in an airplane; to conquer a dread disease by the use of the miracle drug penicillin. Behind all these privileges, of course, stand the investments and labors of our whole society. One group of men supplies automobiles, another penicillin. At Sohio, we have undertaken to supply another public demand . . . petroleum products. It has required the constant reinvestment of a large part of our annual profits, as well as the investment of new capital, in new equipment.
At first we endeavored to fill the gap
between our supply and the public demand by increasing our refinery capacity
and relying upon outside crude oil brokers for our raw material. We found that
these sources were at times not dependable. To gain an assurance of crude oil
supply we built gathering lines in oil fields as they were developed, buying
direct from the oil producers,
thus enabling us to haul crude oil by pipe to rail heads and to ship by tank
car to our refineries.
Later we went into the oil transportation business, investing new millions in storage facilities and long distance pipe lines . . . hoping thereby to lower our delivered cost of crude oil to our refineries which in turn would enable us to hold down the cost of our products. It was only a partial solution. Ohio needed and demanded still more petroleum products, at reasonable prices.
So finally, as we could generate the money, in order to give us an additional assurance of crude oil supply for our refineries, we went into the oil producing business. We extended our pipe lines into many states, wherever oil was found. We leased oil lands and drilled our own wells. And when we found oil we brought it back to Ohio. We refined it, distributed it, and delivered its products to the consumers.
So today when you ask our service station man to fill your tank, he starts a pump, which in effect, may reach a thousand miles across the continent and two or three miles down into the earth to place this priceless natural resource at your disposal.
It's a far-flung and carefully designed
machine we've had to build to deliver Sohio products to Ohio people. But our
problems are typical of those of the petroleum industry. We are all serving
our American society, endeavoring
to improve tomorrow what we have today, so that each one of us may benefit from
the finest products at the lowest practical cost.
February 5ih, 1950
Finding Oil, a Unique American Gift
W. T. HOLLIDAY
Oil is where you find it. And to find it, you must drill for it. However, there is a saying in our industry that oil is in men's heads. The human mind figures out, with more and more scientific help, where oil might be found, and then there has to be the intellectual fortitude to drill that test well. Since about 80% of all wildcat wells are unsuccessful, intellectual fortitude is indeed required.
The United States within its borders has discovered and developed more oil than all the rest of the world put together.
Does this mean that the United States has been more favorably endowed by nature than the rest of the world? Quite the contrary.
Our country constitutes only 5% of the
total land area of the earth and
contains within its borders only 15%
of the earth's total area of important sedimentary basins of a character favorable
for the occurrence of oil. Per unit of area favorable for oil, we have found
in our own land seven times as much oil as the rest of the world.
It is manifest that Americans' superiority in finding the oil in the earth is due to the fact that they search for it more assiduously, and find it more effectively, than any other people on earth.
Indeed, a great part of the oil found in other countries was discovered and developed by Americans. And even where foreigners have explored for oil in other parts of the world the actual work of exploration has commonly been done by American technologists, geologists, and engineers.
If Germany, France, Czechoslovakia, Italy, or Japan, countries in which oil production is negligible in proportion to their current requirements, were populated by Americans, under American laws and customs, their aggregate output of oil today would probably equal that of a similar area in the United States.
One of the factors widely alleged to
have driven the so-called "have not" nations, Germany, Italy, and
Japan, to aggressive war was their urgent need for petroleum. But all of those
nations were sitting on top of geological structures in their own back yards
as favorable for the accumulation of oil as those in the United States. Those
nations just simply never attempted any adequate exploration for the oil in
their own earth. Similarly, Russia now looks with hungry eyes at the oil in
Arabia, only a few hundred miles from her border, when Russia within her own
borders has some of the world's greatest potentialities for oil but has been
drilling each year only about 1/15th
of the number of wells drilled in the United States.
No, the United States has not been more favorably endowed by nature. But it has been blessed with a government based upon freedom and with a system of individual enterprise which gives the individual the hope of reward and the freedom to fail.
This accounts for the fact that we have drilled so many wildcat wells and have been so much more successful in our efforts to find and develop oil.
The finding and development of oil is peculiarly an American enterprise, and the basic reason is the American system of freedom and individual initiative.
February 12th, 1950
Constant Change is the "Status Quo" in Oil
G. T. FOSTER
On our 80th anniversary, we take pride in ourselves as an old company. But the oil industry is not old. Recall that it was only 90 years ago, that the first gallon of oil bubbled from the first well.
The history of how the oil industry has kept ahead of public demand is a major part of the story of technological development in American industry. The oil industry has had faster, and greater technological change and advancement, than any other industry.
Gasoline was a waste product at first, but it made the gasoline engine possible. When the "Model T" caught the public's fancy the industry changed overnight from a source of kerosine light, to a source of power. In the short span of the last 40 years, constant advances have made the petroleum industry America's greatest source of power, next to coal.
Crude petroleum contains only about
25% gasoline at the most—not nearly enough to supply the tremendous market,
and not nearly good enough to run improved engines. So technologists developed
a way to rearrange the molecules
of petroleum, to make gasoline in the quantities and of the quality needed.
I think our own Company's experience may be taken as a case study of the oil industry's experience. In the last 30 years, our Company has hardly built a piece of refining equipment that was not obsolete within a few years. The flood of inventions coming from the research laboratories has kept us in a constant state of change and improvement.
When Sohio became an independent Ohio company, in 1911, we had only one small refinery at Cleveland. In 1916, we installed "cracking" stills at this refinery, to meet the demand for gasoline to run the horseless carriages. When our new Toledo Refinery was finished, in 1921, it was one of the most modern in the industry. By 1927, however, it had become completely obsolete. Starting in that year, we scrapped our cracking stills, built new high-pressure crackers, rebuilt our crude stills, and revamped all our equipment at both Toledo and Cleveland. During the same period, we acquired our refineries at Lima and Latonia, and rebuilt them.
Yet, by 1936, it was time to completely rebuild our Toledo Refinery. The old crude stills and cracking equipment were replaced by a new combination unit. The word "catalyst" entered our vocabulary. Starting in 1939, we built "cat-poly" plants at all our refineries.
In 1944, we completed as a war facility
for 100 octane base stock, a catalytic cracking unit at Cleveland. This equipment is now being rebuilt to make way for an even more up-to-date "cat-cracker." This year, we will also finish the complete rebuilding of our Lima Refinery, enlarging it, and giving it the last word in catalytic cracking, and lubricating oil processing facilities.
In between each of the major programs I have cited today, there have been thousands of smaller improvements. And technology has not been applied solely to refining. From crude oil in the ground, to gasoline in the tank, the petroleum industry has made use of every device, every process which science could discover, to keep products ahead of the times, to better satisfy public demands. It has cost the oil industry a staggering investment in research, and improved equipment, but in a fiercely competitive industry that is essential to survival.
February 19th, 1950
A Little Company and How Competition Made It Grow
C. T. FOSTER
Ralph Waldo Emerson once observed that "Our chief want in life is somebody who will make us do what we can."
At Sohio we hold that bit of wisdom in high regard because we believe that our Company has not been hampered, but rather been stimulated and strengthened by competition in the oil industry, an unremitting battle that rages from the oil fields to the street corner service stations.
Before the Standard Oil dissolution in 1911, our Company, as a supplementary part of a great organization, had been relegated to the role of a marketer in Ohio, with one little refinery in Cleveland that could supply only a fraction of our needs.
In 1911 we were thrown out into the
world alone, unassociated with any other company to help us, a poor little company
having to buy most of its products, having to buy its crude oil, at a fat premium,
from some other company that had direct connections with the oil producers and
its own gathering lines, having to ship our crude oil in someone else's pipe
line at tariff rates that for years
were excessive—all with the result of excessive delivered cost of crude oil
to our refinery.
That might have been all right for an easy life if there had not been competition that threatened our very existence. But right at that time, when the automobiles were demanding gasoline, much larger and stronger companies than ours were moving into Ohio to fill the void of demand for a new product.
What chance did we have against these integrated companies, producing crude oil, buying direct from other producers, with their own gathering lines, their own crude oil pipe lines, and their own refineries adequate to supply all their own needs? There was competition with a vengeance!
We had to use what we had, a marketing organization. Under the spur of competition we had to make our marketing so efficient that we could meet the prices of our giant competitors and still make enough profit to expand our refining capacity to meet our own requirements.
Then we had to be so efficient in marketing
and refining that we could make a profit and begin to integrate ourselves into
doing our own crude oil purchasing and gathering, as new oil fields offered
the opportunity, then building our own pipe lines and water transportation,
and finally—only in 1943, after years of effort-getting into the production
of crude oil. It took a lot of effort, generating money internally and making
a showing that would persuade the
public to buy our securities. But we hard-scrabbled from poverty and under-privilege
to a present point of hopeful economic self-sufficiency, and we are trusting
that the healthful American competition will make us continue to struggle. We
hope we shall continue to have to compete against organizations far more powerful
than ourselves. The essence of life is the necessity for trying to do our best.
The testing of our powers in an environment which requires but encourages our
effort, is what has made America great. And it is the American system of competition
which has provided that healthful and invigorating environment.
February 26th, 1950
Standard Oil Spirit
W. T. HOLLIDAY
We cannot adequately observe our Company's 80th anniversary without paying tribute to the men and women who have worked for it. The history of our 80 years of corporate existence is the history of four generations of Standard Oil men and women.
I have been associated with the last two generations, but it was also my privilege to know a few of the men of the first generation, and quite a number of the second. They have all been alike in their mutual loyalty to each other, and to their Company, and in their feeling of pride in their organization. The fraternal spirit of our institution, inaugurated by the first generation, has been handed down undiminished from one generation to another.
One of the men of the second generation once said to me, with the deepest earnestness: "When a man goes to work for The Standard Oil Company he has a rebirth. He gets a new father and mother, and new brothers and sisters."
One reason, I believe, for the preservation
for 80 years of this feeling of security and mutual loyalty and trust is that
our Board of Directors, since the beginning, has
always been a working Board. Its members all rose from the ranks and have devoted
their lives to working and living with this organization of people. A noted
columnist once wrote that the thing he liked about our Company was that when
a president retires we hire a new office boy.
Of course, we are a human institution, and any human institution must fall far short of perfection. We have made our mistakes, we have not been able always to live up to our ideals and traditions. But the people of Sohio have always tried to do so. And any success which our Company has achieved has been the result of the thought and effort of its people.
May I be pardoned, therefore, if I take this occasion to speak over the heads of our radio audience and extend to all the people of Sohio 80th anniversary greetings and our deepest appreciation of all that they have done and all that they are.
March 5th, 1950